Offical Receiver v Parker, E.A

[1987] FCA 134

I I IMITEIJ DISTRIBUTION

CATCHWORDS

BANKRUPTCY - application by trustee €or greater contrlbution of bankrupt's income - excess of income over expenditure -

whether sufficient provision for future income tax is being

made - whether order sought would create further diEficulties

for bankrupt.

Bankruptcy Act 1966 ss .149 , 131(2).

Re Saunders, Ex parte Saunders L18951 2 Q.B.	4 2 4 .
Re Ward, Ex parte Ward [l8971 1 Q.B. 266.

Re ELIZABETH ANN PARKER, EX PARTE: OFFICIAL RECEIVER

NO. W185 OF 1986

Jackson J.

27th March 1987

Sydney

LIMITED DISTRIBUTION

I N THE	FEDERAL	COURT	OF	AUSTRALIA	)
)

GENERAL	D I V I S I O N	1
)

BANKRUPTCY DISTRICT OF THE STATE OF No. W185 of 1 9 8 6

)

NEW SOUTH WALES AND ) )

THE AUSTRALIAN CAPITAL TERRITORY 1

RE :

- ELIZABETH ANN PARKER

Debtor

EX PARTE:

OFFICIAL TRUSTEE I N

BANKRUPTCY

CORAM :	JACKSON J.
DATE :	2 7 t h M a r c h 1 9 8 7
PLACE :	S y d n e y

MINUTES OF ORDER

THE COURT ORDERS THAT:

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1. P u r s u a n t t o s . 1 3 1 ( 2 ) of t h e B a n k r u p t c y A c t 1 9 6 6 u n t i l

f u r t h e r o r d e r t h e sum of $ 3 5 0 . 0 0 p e r m o n t h b e p a i d

from t h e income of t h e b a n k r u p t t o t h e t rustee o f h e r

e s t a t e a n d t h a t t h e f i r s t s u c h p a y m e n t b e m a d e o n

3 0 t h A p r i l w i t h l a t e r s u c h p a y m e n t s b e i n g m a d e o n or

b e f o r e t h e l a s t d a y of e a c h m o n t h .

NOTE : S e t t l e m e n t a n d e n t r y of o r d e r s is d e a l t w i t h i n

B a n k r u p t c y R u l e 1 2 4 .

LIMITED DISTRIBUTION

IN THE FEDERAI, COURT OF AUSTRALIA	)
)

DIVISION GENERAL 1 )

BANKRUPTCY DISTRICT OF THE STATE OF ) No. W185 of 1986

)

NEW SOUTH WALES AND ) )

THE AUSTRALIAN CAPITAL TERRITORY )

- RE : ELIZABETH ANN PARKER

Debtor

EX PARTE: OFFICIAL TRUSTEE IN

BANKRUPTCY

CORAM :	JACKSON J.
DATE :	27th March 1987
PLACE :	Sydney

REASONS FOR JUDGMENT

The applicant seeks an order under sJ31(2) of the

Bankruptcy Act 1966 that the bankrupt	pay to the trustee
$700.00 per month out of her income.

This is the bankrupt's second bankruptcy, the f i r s t

having commenced on 12th October 1978, when a sequestration

order was made on the petition of the Deputy Commissioner of

. .

2.

Taxation. In that bankruptcy a dividend of approximately 12

cents in the dollar was paid to unsecured creditors and the

bankrupt was discharged from the bankruptcy on 13th October

1983 pursuant to s.149 of the Bankruptcy Act. On 4th March

1986 the second sequestration order was made against the

bankrupt, again upon the petition of the Deputy Commissioner

of Taxation. The petitioning creditor, who was also the only creditor claiming against the estate, based the petition on a debt of $60,428.01, representing income tax not paid for the financial years 1980 to 1985 inclusive.

In May 1986 the bankrupt agreed to make contributlons to the estate of $100.00 a month and has in fact done so up to the present.

In support of the application the applicant relies

primarily on paragraph 8 of the affidavit of the Official

Receiver Mr Bluett which sets out the bankrupt's income and

expenditure for the period April 1986 to January 1987. On the

face of it paragraph 8 discloses a monthly average excess

of

$750.00 of income over expenses. The bankrupf, in her

affidavit of 20th March 1987, admits that the details of

income and expenditure set out In paragraph 8 are true and

that these details were prepared from records	maintained by
her.

3.

In this regard the income of the bankrupt comes from one source namely the receipts from a medical practice and her

expenses consist of a salary paid to her husband, surgery

expenses, contributions to the bankrupt's estate, drawings and

a provision for income tax. As has been stated previously,

the net result of subtracting those expenses from income

produces an excess of around $750.00 per month on average. It seems clear enough, however, that the provision being made for income tax in these amounts is insufficient. Thus if one

looks at paragraph 8 it can be seen that from the period April

1986 to January 1987 the income which would be assessable

income would be $76,173.00. The allowable deductions would

presumably be represented by the "salary to husband" and

"surgery expenses" totalling $50,526.00. See Exhibit 1. If

these figures are increased proportionately to represent a

twelve month period and if it is assumed that they would

equate with the figures for the financial year, then rough

estimations of taxable income and of tax payable can be made.

On this basis the taxable income f o r a full year

would be about $30,776.00, on which at current rates the tax and medicine levy payable would be $9,361.00. The provision for tax contained in the accounts in paragraph 8 for ten

months of that period is only $4,460.00, and is insufficient.

4.

Section 131(2) of the Bankruptcy Act is in the

following terms:-

"(2) The Court may, upon the application of the

trustee, order that all, or such part as the Court thinks flt, of the income of the bankrupt shall be paid to the trustee for the benefit of the bankrupt's

creditors."

and it is clear that the discretion which it confers is wide,

and to be exercised on the facts of the particular case. Re

Saunders, Ex parte Saunders 118951 2 Q.B. 424 at 427, Re Ward,

Ex parte Ward [l8971 1 Q.B. 266 at 271.

In the light of the evidence to which I have already

referred I would not be Inclined to order payment of a sum as

high as $700.00 per month. I think that to do so would be to

create difficulties once again for the bankrupt in her

dealings with the Deputy Commissioner. I also think that the

bankrupt would be left with inadequate funds for

contingencies. I am conscious, in saying this, that

substantial sums per month are being paid by the bankrupt to

her husband for his work as a driver in the practice, as

deposed to in the bankrupt's affidavit.

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On the other hand, I do not accept the

bankrupt's assertion in her affidavit that she is unable to

afford to pay more than $100.00 per month to the Official

Receiver. $100.00 per month, in my view, is an understatement

of the amount whlch she could realistically contribute.

5.

In light of what I have said I will exercise my

discretion under s.131(2) in favour of the applicant	but for
an amount which is less than the amount claimed.

I order that until further order the total sum of

$350.00 per month be paid from the income of the bankrupt to the trustee of her estate and that the first such payment be

made on 30th April 1987 with later such payments	being made on
or before the last day of each month.
I certify that this and the f preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Jackson.
Associate:

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Date : 27th March 1987.