Peldan v D.C.T. - [2005] FMCA 547

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PELDAN & ANOR v D.C.T.

[2005] FMCA 547

BANKRUPTCY – Application seeking declaration pursuant to section 120 of the Bankruptcy Act 1966 – consideration of the term ‘tax’ for the purposes of section 120 – whether it should exclude penalties and could include ‘tax’ payable by someone other than the Bankrupt – whether in construing ‘tax’ for the purposes of section 120(2)(a) a similar statutory construction applied in the context of section 122(3)(b).

Income Tax Assessment Act 1936

DFCT v Woodhams (2000) 199 CLR 370
Mathews v Chicory Marketing Board (Vict) (1938) 60 CLR 263
MacComick v FCT (1983-84) 158 CLR 622
Air Caledonie International v The Commonwealth (1988) 165 CLR 462
Woodhams v DFC 87 ATC 5119
Victorian Producers’ Co-op Co Ltd v Kenneth (1999) 1 ABC (NS) 198
Sutherland v Brien (1999) NSWSC 155
Official Trustee in Bankruptcy v Lopatinsky (2003) 129 FCR 234
Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217
Zohar v Hicks (2002) FMCA 308

Applicants:

MICHAEL PELDAN & MORGAN LANE (TRUSTEES OF THE BANKRUPT ESTATE OF THOMAS MELLERS)

Respondent:

DEPUTY COMMISIONER OF TAXATION

File No:

BRG 293 of 2004

Delivered on:

28 April 2005

Delivered at:

Brisbane

Hearing date:

15 March 2005

Judgment of:

Baumann FM

REPRESENTATION

Counsel for the Applicant:

Mr Couper QC with Ms Hindman

Solicitors for the Applicant:

Quinn & Scattini

Counsel for the Respondent:

Mr Hacks SC with Mr Byrne

Solicitors for the Respondent:

Australian Government Solicitor

ORDERS

A declaration be made that the transfer of property constituted by a payment of $181,476.10 on 7 June 2002 is void against the Applicant Trustee.
The Respondent shall pay to the Applicants the sum of $181,476.10.
The parties shall file and exchange any written submissions as to costs within 21 days.
That the parties be at liberty to apply in respect of interest.
Otherwise the Application is dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 293 of 2004

MICHAEL PELDAN & MORGAN LANE (TRUSTEES OF THE BANKRUPT ESTATE OF THOMAS MELLERS)

Applicant

And

DEPUTY COMMISSIONER OF TAXATION

Respondent

REASONS FOR JUDGMENT

Introduction

On 2 June 2003, Thomas Mellers (“the bankrupt”) filed a Debtors petition and the Applicants were appointed trustees of his estate.
On 9 June 2004, the Applicants filed an Application in this Court seeking the following declaration, namely:-
“that the payment of the sum of $408,208.64 by Thomas Mellers to the Respondent on 7 June 2002 was an undervalued transaction pursuant to section 120 of the Bankruptcy Act 1966 (Cth) and void against the Applicants.”
The Respondent, Deputy Commissioner of Taxation opposes the Application.

Background facts

It is agreed that between 1 September 2000 and 28 February 2002, KLAT Pty Ltd (a company of which the Bankrupt was a Director at all material times), incurred taxation debts to the Australian Taxation Office (“ATO”) in excess of $450,000.
The Respondent issued between 10 May 2001 and 24 April 2002, Director Penalty Notices (“DPN”) pursuant to s.222AOA of the Income Tax Assessment Act 1936

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] FMCA 547
Decision Date: 28 April 2005

CaseChat Overview and Summary

The matter before the court was a dispute over the transfer of property involving the Applicant Trustee and the Respondent. The Applicant Trustee sought a declaration that a payment of $181,476.10 made on 7 June 2002 was void, and for the Respondent to repay this sum. The Respondent disputed the Applicant’s claims, arguing that the transfer was valid and that the Applicant had no standing to challenge it.

The central legal issue before the court was whether the transfer of property in question was void and, if so, whether the Applicant Trustee had the right to seek its nullification. The court had to consider the nature of the transfer, the legal standing of the Applicant Trustee, and the implications of the transaction under relevant property law.

In delivering the judgment, the court found that the transfer of property was indeed void. The court determined that the Applicant Trustee had the legal right to challenge the transfer and that the payment made by the Respondent did not meet the necessary legal requirements. Consequently, the court made a declaration that the transfer was void against the Applicant Trustee and ordered the Respondent to repay the sum of $181,476.10. The court also directed the parties to file and exchange written submissions regarding costs within 21 days and allowed the parties to apply for interest. The application was dismissed in all other respects.

Orders

Orders of the court

A declaration be made that the transfer of property constituted by a payment of $181,476.10 on 7 June 2002 is void against the Applicant Trustee.

The Respondent shall pay to the Applicants the sum of $181,476.10.

The parties shall file and exchange any written submissions as to costs within 21 days.

That the parties be at liberty to apply in respect of interest.

Otherwise the Application is dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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