Piccolo v McVeigh

[2002] FCA 323

FEDERAL COURT OF AUSTRALIA

Piccolo v McVeigh [2002] FCA 323

BANKRUPTCY – whether income distributed to a beneficiary of a bankrupt’s family discretionary trust by the trustee is income received as a result of work done or services performed by a bankrupt

Bankruptcy Act 1966 (Cth) ss 139J and 139L(a)(vii)

Challen v Bendeich [1999] FCA 845 - cited
March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 – cited
Australian Securities Commission v Kavanagh (1993) 11 ACSR 148 - cited
Hope v Bathurst City Council (1980) 144 CLR 1 - cited
Environment Agency v Empress Car Co. Ltd [1999] 2 AC 22 – cited
J & G Knowles & Associates Pty Ltd v Commissioner of Taxation (2000) 96 FCR 402 - cited

JOHN PETER PICCOLO v DEAN ROYSTON McVEIGH
V 764 of 2001

JUDGE:         MERKEL J
DATE:           25 MARCH 2002
PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 764 OF 2001

BETWEEN:	JOHN PETER PICCOLO APPLICANT
AND:	DEAN ROYSTON McVEIGH RESPONDENT
JUDGE:	MERKEL J
DATE OF ORDER:	25 MARCH 2002
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.   The appeal of the applicant be allowed.

2.   Paragraph (1)(b) of the directions in para 3 of the decision of the Administrative Appeals Tribunal made on 2 July 2001 be set aside.

3.   The cross-appeal of the respondent be dismissed.

4.   The respondent pay the applicant’s costs of and incidental to the appeal and cross-appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 764 OF 2001

BETWEEN:	JOHN PETER PICCOLO APPLICANT
AND:	DEAN ROYSTON McVEIGH RESPONDENT
JUDGE:	MERKEL J
DATE:	25 MARCH 2002
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. The present appeal concerns decisions by the respondent, in his capacity as trustee in bankruptcy of the estate of the applicant, to issue contribution assessment notices to the applicant under Div 4B of Pt VI of the Bankruptcy Act 1966 (Cth) (“the Act”). The Division provides for a compulsory income contribution regime for bankrupts whose income during the period of bankruptcy exceeds a specified threshold amount. The assessment notices relate to four contribution assessment periods, 9 May 1996 to 8 May 1997 (“the first period”), 9 May 1997 to 8 May 1998 (“the second period”), 9 May 1998 to 8 May 1999 (“the third period”) and 9 May 1999 to 8 May 2000 (“the fourth period”).

2. The applicant applied to the Administrative Appeals Tribunal (“the AAT”) to review the decisions of the respondent to issue the assessment notices.  The AAT set aside each of the decisions and remitted the decisions in respect of the first, third and fourth periods to the respondent with directions that he:

   “(1)     calculate the applicant’s contribution on the basis that:

   (a)the monetary amount that the applicant received as reasonable remuneration from his employment with Poole Levy and Appel Pty Ltd in each of the contribution assessment periods was $35,000 per annum;

   (b)