Panton v Deputy Commissioner of Taxation

[1999] FCA 229

FEDERAL COURT OF AUSTRALIA

Panton v Deputy Commissioner of Taxation [1999] FCA 229

DOUGLAS BLAIR PANTON v DEPUTY COMMISSIONER OF TAXATION
QG 7406 OF 1998

DOUGLAS BLAIR PANTON v DEPUTY COMMISSIONER OF TAXATION
QG 7407 OF 1998

DOWSETT J
5 MARCH 1999
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7406 OF 1998

BETWEEN:	DOUGLAS BLAIR PANTON Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY		QG 7407 OF 1998

BETWEEN:	DOUGLAS BLAIR PANTON Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent
JUDGE:	DOWSETT J
DATE OF ORDER:	5 MARCH 1999
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        Applications QG 7406 of 1998 and QG 7407 of 1998 be dismissed.

2.        The applicant pay the respondent’s costs of each application.

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	QG 7406 OF 1998

BETWEEN:	DOUGLAS BLAIR PANTON Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY		QG 7407 OF 1998

BETWEEN:	DOUGLAS BLAIR PANTON Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent
JUDGE:	DOWSETT J
DATE:	5 MARCH 1999
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. The Deputy Commissioner of Taxation recovered summary judgment against the applicant in the Supreme Court of Queensland on 26 August 1998 in the sum of $403,085.70, with costs.  At the time, there was an “informal” application for a stay.  Williams J declined that application, placing primary weight upon the prospects of the present applicant in his attempts in the Administrative Appeals Tribunal to have the assessment of taxation set aside and the conduct of the Deputy Commissioner in connection with the assessment.

2. The proceedings in the Administrative Appeals Tribunal are still outstanding.  There has been a hearing over several days this week, and the decision is reserved.  The applicant has made an application within time for an extension of time within which to comply with the bankruptcy notice, which application is presently listed before me.  The respondent has indicated that if the application is unsuccessful, it proposes to file a petition based upon the bankruptcy notice but will not seek a final sequestration order pending the determination of proceedings in the Administrative Appeals Tribunal.

3. The applicant persists in his application for an extension of time within which to comply so as to avoid committing an act of bankruptcy.  The respondent is concerned to ensure that the “relation back” period extends as far back as possible in the event that a sequestration order is finally made.  I am inclined to adopt the approach outlined by Sheppard J in Re Geard (unreported, Federal Court, 11 February 1994).  His Honour there suggested that relevant considerations include prospects of success of any appeal, whether or not the Court in which the judgment was recovered granted a stay and, whether or not there had been a stay, the assets of the applicant and the likely effect on creditors, including the creditor issuing the bankruptcy notice.

4. In the end, the question comes down to a balancing of the convenience of the two alternative approaches suggested:  the one being an extension of time in which to comply with the bankruptcy notice; the other being the refusal of such relief upon the Deputy Commissioner’s undertaking that he will not, in the interregnum, seek a sequestration order.  The disadvantages of the latter course from the applicant's point of view are, of course, of the general business nature.  It will mean that he has committed an act of bankruptcy and that other creditors may take advantage of it, even if the judgment is eventually set aside or the assessment varied.

5. On the other hand, from the point of view of the Deputy Commissioner as a creditor, and from the point of view of other creditors (if there be any - the suggestion is that there are none pressing), to extend time for compliance with the bankruptcy notice would deprive them of an act of bankruptcy which might well found a claim to assets subsequently disposed of.  In the end, the balance of convenience lies in favour of the creditors.  If the debtor is successful in his proceedings in the Administrative Appeals Tribunal, then the Deputy Commissioner will not be able to proceed on his petition.  That will leave the applicant at the mercy of other creditors, but one asks rhetorically, “Why should he not be at their mercy?”  If there are other creditors, then they are as entitled to be paid as anybody else.  In those circumstances, the application will be refused.  I note that in this case, it is not really practicable, as Williams J pointed out, to consider the merits of the case in any great detail, nor is it suggested that there was any relevant misconduct by the Commissioner in issuing the assessment and seeking to pursue it.  With respect to the second application, it seems to me that it stands or falls with the first.  It appears to be an application to restrain presentation of a petition.  For the reasons which I have given, it is not appropriate to take that step.  Both applications are dismissed.

6. In so far as concerns the question of costs, in some circumstances, I would be inclined to think that the costs should stand over to await the outcome of proceedings in the Administrative Appeals Tribunal.  If the assessment were set aside, it might well be unjust if the taxpayer were lumbered with the costs of this application.  However, the Deputy Commissioner made an appropriate offer as to the disposition of the present applications on 18 November 1998.  That proposal reflected the order which has been made.  In those circumstances, it is appropriate that the Deputy Commissioner have his costs of both applications.  I order the applicant to pay the respondent's costs of each application.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:             5 March 1999

The Applicant appeared in Person.
Counsel for the Respondent:	Mr P E Hack
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	5 March 1999
Date of Judgment:	5 March 1999