Quinn, J.T. v Deputy Commissioner of Taxation

[1990] FCA 610

JUDGMENT NO. ........ ...... ..... - 610 ,YO

IN T H E FEDERAL COURT O F AUSTRALIA	)
GENERAL DIVISION	) No P 2704 of 1988
BANKRUPTCY DISTRICT OF THE	)
STATE O F NEW SOUTH WALES	)

-	RE	JAMES T OUINN
Debtor
EX P A R T E	DEPUTY COMMISSIONER O F
TAXATION

Davres J

:	17 July 1990
Sydney

REASONS FOR JUDGMENT

EX TEMPORE

Thrs is an application to adjourn a petitlon seekrng a sequestrat~on order against the

estate of Dr J T Qurnn, a psychratrist who is still carrying on his profcsslon The petrtion is

brought by the Deputy Commissioner of Taxatron and arises out o f a tax llabilrty for the 1978

purpose of producing assessable rncome
to 1985 years of income. The original tax lrabrlrty was apparently in the vrcrnrty of $455,000	but
I hdve been rnformed that the present llabrl~ty	is about $516,000

Dr Qurnn has no debtors other than the Deputy Commlssroner, and on hls statement
of his income and liabilities, hrs rncome is no more than sufficient to meet hrs expcndrtures, and
he has no assets other than some offrce furniture and the like w h ~ c h I assume are used for the

The petition was presented in November of 1988 and served in March of 1989 Dr

Quinn then made an a p p l ~ c a t ~ o n to the Taxation Relref Board ("the Rel~ef Bodrd") under sectlon

265 of the Income Tax Assessment Act 1936 (Cth) for release from the whole or a part of the tax

l ~ a b ~ l i t y on the ground that the exactlon of the tax would e n t a ~ l serlous hardshlp

On that application having been made, the petltlon was adjourned from tlrne to tlme.

A dec~sion of the Relief Board on 26 June 1990 refused the dppl~cation for rellcf, and the

petition has now come on for hearing once more. Mr B Coles, counsel for Dr Q u ~ n n , has sought

a further adjournment and Mr McCluskey for the Deputy Cornmissloner has opposed the

adjournment.

Mr Coles has put the matter primarily on the footlng that Dr Qulnn has lodged an

application under the Administrative Decis~ons (Judlclal Rev~ew) Act 1977 (Cth) ("the ADJR

Act") s eek~ng orders of rcvlew wlth respect to the d c c ~ s ~ o n f the R e l ~ e f Board and has sought

an adjournment which would a t least enable that application to be dealt w ~ t h	by the Courl Mr
Coles has also submitted that it would not be wlse to proceed w ~ t h	the petltlon a t the present tlme
as D r Quinn has no income from w h ~ c h e can pdy any turn off the debt dnd that the rnak~ng	of
a sequestration order would be llkely not only to stay the a p p l ~ ~ a t ~ o n	for orders of revlew agalnst

the dec~sion of the Relief Board, but would he likely to stay two dctions whlch Dr Quinn has

brought in the Supreme Court of Queensland, one actlon belng agdlnst Metsrs Ernst & Whinney who advlsed Dr Quinn wlth respect to h ~ s taxatlon a f f a~ r s , dnd the other actlon b e ~ n g brought agalnst a former de facto spouse.

I hdve looked at the a p p l ~ c a t ~ o n under the ADJR Act Whether or not there is any

substantldl, arguable ground is d r f f~cu l t o determine	Ccrtalnly tome matters arc scarcely
arguable For example, the dppl~catron	allege5 that the Rellef Board wrongly took Into account

the action Instituted by Dr Qulnn against Messrs Ernst & Whtnney and agatnst his former de facto spouse Mrs Graham. In my opinion, it was relevant for the Rellef Board to examlne and

consider those matters for they represented rights of actlon and reflected the possib~lity that Dr

Quinn might in the future have funds from which the debt could be pald But havlng said that,

as to whether the application would succeed on other grounds IS a matter about which I am not

presently able to form any view.

In the end, I have come to the view that the petitlon should not be stayed, principdlly

for the reason that i t seems to me that the matter as to whether or not Dr Quinn can pay any sum or has any useful assets is a matter whlch ought to be determined by dn independent authority such as the Trustee in Bankruptcy and that the Relief Board IS not the appropriate body to

determine such a matter

The decision of the Relief Board shows that, on the figurer whtch it had before it and

to which there appears to be no signiftcant, or Indeed any challenge in lhc application under the

ADJR Act, Dr Quinn and his wlfe, who is also d medical practltloner, recetve between them a fortnightly income of $3000 net of tax and that the11 outgoings are only approximately $2000 a

fortnight So that in Itself lnd~cated to the Reltef Board that there was some ablllty to pay tax.

Whether, of course, it was proper to rely upon Mrs Qutnn's lncome is not matter which IS clear

The letter from the Rellef Board shows that Mrs Qutnn has an lncome o f $881 per fortnight from the New South Wales Health Department dnd an lncome of $1280 per fortntght from J T. Quinn

Medical Pty Limtted, which appears to be a prlvate company in whlch Dr J T. Qulnn has an interest What 1s the basts for that payment and whether it should all go to Mrs Qulnn is a matter

whtch the Off rc~al Trustee would be the appropriate person to determine

Dr Quinn, on hrs statement, is a person without assets The house IS in Mrs Quinn's

name, the car is in the name of J T Qurnn Medrcal Pty Limited and dpparently Dr Quinn owns nothing significant in the way of personal furnlturc or the l ~ k e But whether that is so IS all a matter whlch the Official Trustee would be better equrpped to investrgate than would a Relief Board

On the material which the Rellef Board set out in rts letter, there would appear to be

no prospect that the Relief Board would release the whole of the tax liability That being so, in the absence of any offer being made by Dr Quinn to the Rellef Bodrd or in the present proceedings, thrs seems an appropriate case for the matter to be rnvestigated in the bankruptcy

jurisdiction of this Court to see whether Dr Qulnn has d rdpacrty to pay dny sum off the debt

and if so what that sum ought to be Insofar as he has any rdpdcity to pay and it is proper for hlm to make a contribution, then the Bankruptcy jurrsdrctron is the proper jurrsdictlon to ensure

that that occurs. At the end of the bankruptcy, Dr Uuinn wrll be entlrely discharged from the

debt.

For these reasons, it seems to me that it would be wrong to adjourn t h ~ s matter just to

allow the question of the valldity of the decision of the Rel~ef	Board to be litigated or to adjourn
the matter so that, if Dr Qulnn was successful, the mdtter could go back to the Relref Board. It

seems to me that the matter ought to be dealt wrth by the Trustee in Bankruptcy I take the same view with the proceedings against Messrs Ernst & Whinncy and agalnst the former de facto spouse. If there are good grounds for those proceedings dnd r f somebody is prepared to put up the funds, those proceedings will go ahead If the Trustee thlnks that they are not worth

pursuing then they will lapse. But 11 behoves the proper authorrty to determine that type of

question I will refuse the appl~cation

1 certlfy that this and the 4
preced~ng pages are a true copy of the reasons for judgment of

the Honourable Mr Just~ce Davies.

i

Associate.

Date:  17 July 1990