Palmer v Deputy Commissioner of Taxation

[2002] FCA 1365

FEDERAL COURT OF AUSTRALIA

Palmer v Deputy Commissioner of Taxation [2002] FCA 1365

MICHAEL GEORGE PALMER v DEPUTY COMMISSIONER OF TAXATION 

Q 7273 of 2000

DOWSETT J
16 OCTOBER 2002
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 7273 OF 2000

BETWEEN:	MICHAEL GEORGE PALMER APPLICANT
AND:	DEPUTY COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	DOWSETT J
DATE OF ORDER:	16 OCTOBER 2002
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        The application for review is refused;

2.        The sequestration order made on 23 August 2002 stands;

3.        The order of suspension made on 7 October 2002 is terminated;

4.        The notice of motion is dismissed; and

5.The costs of the respondent Deputy Commissioner, including reserved costs, be his costs in the bankruptcy.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 7273 OF 2000

BETWEEN:	MICHAEL GEORGE PALMER APPLICANT
AND:	DEPUTY COMMISSIONER OF TAXATION RESPONDENT

JUDGE:	DOWSETT J
DATE:	16 OCTOBER 2002
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. The deputy registrar made a sequestration order against the present applicant on 23 August 2002, based upon a judgment recovered by the Deputy Commissioner of Taxation in the District Court on 22 June 1998. On that day a summary judgment, previously entered, was set aside. A fresh judgment was then entered, apparently upon the basis that the District Court Judge came to the conclusion that there was no arguable defence to the proceedings. The judgment was based upon a certificate pursuant to s 177(1) of the Income Tax Assessment Act 1936 (Cth) (the “Act”). As far as I am aware, there has been no attempt to review the assessment in the manner prescribed in the Act. No attempt has been made to set aside the District Court judgment.

2. A bankruptcy notice was issued on 23 July 1998 and, as I have said, a sequestration order was made on 23 August this year. The applicant now asks me to review that sequestration order. Various grounds have been advanced in support of that application. They boil down to the assertion that a judgment debtor is entitled to go behind a judgment upon which a bankruptcy notice is based and upon which the petitioner relies to establish status as a creditor. That the Court will go behind such a judgment in an appropriate case is, of course, beyond doubt. However, in the present case, it seems that to go behind the judgment will be of assistance to the applicant in avoiding bankruptcy only if he is also entitled to go behind the certificate as to the assessment issued pursuant to s 177(1) of the Act. The applicant submits that the force of such a certificate is spent once it has been the subject of a judgment. Thus it cannot be relied upon at the hearing of a petition in bankruptcy if the validity of the judgment is challenged. In other words, the Commissioner can rely upon the certificate in order to obtain a judgment, but cannot rely on it thereafter. It would follow that in bankruptcy proceedings, a judgment debtor could always, in effect, go behind such a certificate. There is, as far as I can see, no possible statutory justification for such an approach to s 177, nor is there any reported case in which such an approach has been viewed with favour or, as far as I can see, advanced. It would be most surprising if such a view were correct. It would seriously undermine the efficacy of the certification process.

3. The applicant has also argued that the s 177 certification process is inconsistent with the jurisdiction conferred upon this Court by s 39B of the Judiciary Act 1903 (Cth). The argument seemed to be that as these proceedings arise under Federal legislation it is, for some reason, impermissible to impose a restriction such as that contemplated by s 177(1) of the Act. That argument is inconsistent with the view expressed by the majority of the High Court in Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1994-1995) 183 CLR 168. Further, I am not presently exercising any jurisdiction conferred by s 39B. I am exercising the jurisdiction conferred by the Bankruptcy Act. 

4. In those circumstances I turn to the admissibility of an affidavit by Jeffrey David Cannings, an accountant.  He offered the view that the Commissioner’s assessment was based upon a misconception of certain aspects of the case.  The affidavit may have been admissible if it were permissible to go behind the certificate.  As I am of the view that it is not, the affidavit is irrelevant.  I will not receive it in evidence.  None of what I have said is intended to detract from the circumstances recognised in Richard Walter in which relief pursuant to what is now subs 39B (1) may be available.  That is a special situation and is adequately dealt with in Walter.  I need not elaborate further upon it for present purposes.

5. In the circumstances I refuse the application for review.  The sequestration order stands.  I terminate the order of suspension made on 7 October 2002.

6. The notice of motion is dismissed.

7. I order that the costs of the respondent Deputy Commissioner, including reserved costs, be his costs in the bankruptcy.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:            20 November 2002

Counsel for the Applicant:	Mr C D Coulsen
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Mr M Morrisey
Solicitor for the Respondent:	Warren Gardner & Co
Date of Hearing:	16 October 2002
Date of Judgment:	16 October 2002