Deputy Commissioner of Taxation v Woods

[2018] FCCA 1815

FEDERAL CIRCUIT COURT OF AUSTRALIA

DEPUTY COMMISSIONER OF TAXATION v WOODS [2018] FCCA 1815

Catchwords:
BANKRUPTCY – Proceedings in connection with sequestration – petition and sequestration order – creditors’ petition and affidavits – allegation of act of bankruptcy – whether debt discharged.

Legislation:

Bankruptcy Act 1966 (Cth), s.52
Inscribed Stock Act 1911 (Cth)

Cases cited:

Ennis v Credit Union Australia [2016] FCCA 1705

Meads v Meads (2012) ABQB 571

Applicant: DEPUTY COMMISSIONER OF TAXATION

Respondent: SONYA WOODS

File Number: BRG 315 of 2018

Judgment of: Judge Jarrett

Hearing date: 15 June 2018

Date of Last Submission: 15 June 2018

Delivered at: Brisbane

Delivered on: 15 June 2018

REPRESENTATION

Solicitors for the Applicant: ATO Dispute Resolution

The Respondent appeared in person

ORDERS

1. The application for review filed on 6 June, 2018 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 315 of 2018

DEPUTY COMMISSIONER OF TAXATION

Applicant

And

SONYA WOODS

Respondent

REASONS FOR JUDGMENT

(Ex Tempore)

1. This is an application to review a decision of a registrar of this court who, on 17 May, 2018 ordered the sequestration of the estate of the respondent, Sonya Woods, in bankruptcy. The order was made on the usual basis, namely that the respondent had failed to comply with the terms of a bankruptcy notice that had been served upon her which, on her own material, occurred on 7 February this year. The bankruptcy notice was based upon a judgment given against the respondent in the Magistrates Court at Southport for the sum of a little over $63,700 inclusive of costs.

2. The bankruptcy notice was issued in November, 2017 and served in February, 2018. As I say, on 17 May a registrar, despite the filing of a notice of opposition to the creditor’s petition and an affidavit in support of that notice, decided to sequestrate the respondent’s estate. This is a hearing de novo of the creditor’s petition. It is not an appeal from the registrar’s decision. Accordingly I have had regard to the three notices of grounds of opposition to the application filed on 16 May, 2018 by the respondent. There are two in the same terms and a third which is different. I have also had regard to and read her affidavit of 16 May, 2018 and her affidavit of 7 June, 2018.

3. There are a number of arguments to deal with, the first of which seems to deal with the question of the validity of the bankruptcy notice. There is a suggestion in her affidavit of 16 May that the bankruptcy notice is invalid. Rather than attempt to paraphrase for myself the basis of the invalidity, it is probably as well to set out in full the applicant’s claims about that. She says:

   The Bankruptcy Notice received was a fraudulent documents pursuant to the four corners rule, whereby every word, phrase, paragraph or number within a box is effectively from another source. 

   The Bankruptcy Notice contains within it no less than thirty five (35) boxes on the first two (2) pages and is a document designed for the sole purpose of deceiving any uneducated recipient.

4. Her affidavit then goes on on page 10 and following to deal with various aspects of the bankruptcy notice. I must confess that I am unfamiliar with the four corners rule or any rule that deals with matters that appear within a box on a form in the way suggested by the applicant.

RECORDED     :   NOT TRANSCRIBED

1. So I do not understand the argument. The bankruptcy notice is, however, issued in what appears to be the form approved for use under the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). It seems that it is in the form in which every other bankruptcy notice is issued, save for the relevant particulars. I am not satisfied that the bankruptcy notice is invalid. There is nothing on the face of it that would suggest invalidity, either in the way in which the respondent suggests or for any other reason.

2. The respondent’s principal argument is that she has discharged the debt. She keeps referring to having paid the debt but there is no evidence before me that it has been paid by the transfer of money. The suggestion is that it has been discharged by the provision of a negotiable instrument of some description to the petitioning creditor. Her affidavit of 16 May sets out the argument in full. I am not going to repeat it. It commences however with the proposition that the Commonwealth of Australia is domiciled in the District of Columbia, United States of America and that by reason of the uniform commercial code of the District of Columbia the Commonwealth of Australia is a corporation and is governed by the Uniform Commercial Code and that it falls into the category of a “US person” as defined in that code. It is asserted in her affidavit that “the COMMONWEALTH OF AUSTRALIA is a Corporation operating in Bankruptcy under a ‘Chapter 11 US Bankruptcy reorganisation’ ”and it is suggested that “Its only asset being the Stock / Birth Certificates of the people, as evidenced in the Inscribed Stock Act 1911 (Cth)”.

3. These are all fascinating suggestions, but they are all wrong.  There is nothing at all of any substance in those arguments.  To the extent that the applicant suggests that the debt has been discharged, she argues that at some stage (the date is not entirely clearly to me, but it is not necessary to be precise about the date) she has discharged the relevant debt by sending “payment” to the United States Treasury and the Internal Revenue Service as “is the beneficiary’s lawful right to do so”.

4. She claims that the petitioning creditor is deprived of the right to bring these proceedings because the discharge that she has sent to the United States Treasury has been received and signed for by, or on behalf of, the petitioning creditor, and that occurred within the 21 days limited in the bankruptcy notice for payment or compromise of the debt. However, those arguments too, are wrong. They have never been accepted in a Court in Australia and I do not propose to accept them now.

5. The arguments raised by the applicant are becoming more common. There is an erudite discussion of this voodoo in a case called Meads v Meads (2012) ABQB 571. There are some other cases and perhaps the seminal decision from which these arguments arise is referred to in a decision that I delivered called the Ennis v Credit Union Australia [2016] FCCA 1705. The arguments that the respondent wishes to the raise to the effect that the debt has been discharged are entirely without substance.

6. I am satisfied that the respondent has committed an act of bankruptcy, as alleged by the creditor’s petition.  I am satisfied that she has been served with both the bankruptcy notice and the creditor’s petition.  There is no dispute about that.  I am satisfied that the debt remains due and owing and that all of the formal requirements necessary to be proved pursuant to s.52 of the Bankruptcy Act have been proved.

7. It was appropriate for the registrar to make a sequestration order and it remains appropriate.  In those circumstances the only appropriate order is that that application for review of the registrar’s decision be dismissed.  The petitioning creditor does not seek an order for costs.

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

Date:  10 July 2018