Pascoe v Deputy Commissioner of Taxation

[2007] FMCA 2130

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PASCOE v DEPUTY COMMISSIONER OF TAXATION [2007] FMCA 2130

COSTS – Application for costs – demand for payment pursuant to s.58 Bankruptcy Act 1966 – where payment made to wrong account by Deputy Commission of Taxation – whether Trustee’s costs should be paid.

Bankruptcy Act 1966 (Cth), s.58

Applicant: SCOTT DARREN PASCOE IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF MUSTOPHA MARAACHE

Respondent: DEPUTY COMMISSIONER OF TAXATION

File number: SYG 3184 of 2007

Judgment of: Raphael FM

Hearing date: 18 December 2007

Date of last submission: 18 December 2007

Delivered at: Sydney

Delivered on: 18 December 2007

REPRESENTATION

Counsel for the Applicant: Mr S Pearlman

Solicitors for the Applicant: Macgillivrays Solicitors

Counsel for the Respondent: Mr D Morris

Solicitors for the Respondent: Australian Government Solicitor

ORDERS

1. Application dismissed.

2. The Respondent pay to the Applicant the sum of $500.00 solicitor and client costs together with the court fees on the original proceedings and any service fee and the court fees on this application and any service fees relating thereto plus $50.00 incidentals for each application. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3184 of 2007

SCOTT DARREN PASCOE IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF MUSTOPHA MARAACHE

Applicant

And

DEPUTY COMMISSIONER OF TAXATION

Respondent

REASONS FOR JUDGMENT

1. There comes before me an application for costs in rather unusual circumstances. On 5 July 2007 the applicant Trustee wrote to the Deputy Commissioner for Taxation making a demand for payment in the sum of $31,244 pursuant to s.58 of the Bankruptcy Act 1966 (Cth). The money was required to be paid within 14 days of the date of the letter. The letter concludes:

   “Please ensure that your cheque is made payable to Scott Pascoe as trustee for bankrupt estate of Mustopha Maraache. Should you wish to discuss any aspect of this matter or require any further information please do not hesitate to contact me.”

2. No response was received to that letter but in September the money was paid by the Deputy Commissioner, not to Mr Pascoe as requested, but to an account that had been run by the bankrupt with the Commonwealth Bank. This account had at one stage been frozen but by the time the money was received it had been unfrozen by the Trustee. As the Trustee had no knowledge that the payment had been made he commenced proceedings for the payment. When those proceedings were served upon the Deputy Commissioner he informed the Trustee of the payment and the proceedings went no further save for what is now a rather unfortunately a large file concerning the costs of commencing those proceedings.

3. The Trustee argues that his costs should be paid because he did not know that the payment had been made into an account over which he no longer had any control and that he had specifically told the Commissioner where to make the payment. The Commissioner says that the money was paid into an account that it assumed was frozen by the Trustee and therefore should have come to the Trustee's notice. The Commissioner also says that no letter before action was written and that the demand that the money be paid within 14 days of the date of the letter does not include any threat that proceedings will be issued.

4. I am sympathetic to both parties. It was unfortunate that the Commissioner, some two and a half months after the letter, decided to make the payment without any further correspondence with the Trustee and paid the money into an account other than the account to which that payment was requested. It is also unfortunate that the solicitors for the Trustee did not see fit to write a further letter to the Commissioner before proceedings were commenced, in which case the Commissioner would have told the solicitors that payment had been made. In fact, the proceedings were not commenced for over one month after the payment was made.

5. On balance it seems to me that the rights in this matter belong to the Trustee who commenced proceedings in ignorance of what had occurred and should have at least some costs in relation thereto. I do, on the other hand, have serious concerns about the amount of money that has been expended in relation to this matter. I take into account the failure of the Trustee's solicitors to write again to the Commissioner prior to commencement of proceedings in making this assessment of costs. To my mind it would be fair that the Commissioner pay to the Trustee's solicitors the sum of $500.00 solicitor and client costs together with the court fees on the original proceedings and any service fee and the court fees on this application and any service fees relating to that too. In respect of both proceedings the sum of $50.00 for incidentals each should be paid.

I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: