Randall v Deputy Commissioner of Taxation
[2008] FMCA 858
•27 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RANDALL v DEPUTY COMMISSIONER OF TAXATION | [2008] FMCA 858 |
| BANKRUPTCY – Application for stay – meaning of “decision” for purpose of Administrative Decisions (Judicial Review" Act 1977 (Cth) – “decision” to proceed with litigation rather than negotiate and compromise – review of Registrar's decision to make sequestration order – Bankruptcy Act 1966 (Cth) s.52 factors – “other sufficient cause”. |
| Bankruptcy Act 1966, (Cth), ss.40(1)(g), 52(1), 52(2) Administrative Decisions (Judicial Review) Act 1977 (Cth) Freedom of Information Act 1982 (Cth) |
Adelaide Bank Limited v Badcock [2002] FMCA 10
Bilborough v Deputy Commissioner of Taxation (2007) 95 ALD 371
Broadcasting Tribunal v Bond (1990) 170 CLR 321
Deputy Commissioner of Taxation v McCormick (No.2) (2005) 218 ALR 665 Williams v Spautz (1992) 174 CLR 509
Harris v Caladine (1991) 172 CLR 84
Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163
Sarina v Wollondilly Shire Council (1980) 48 FLR 372
Strictly Stainless Pty Ltd v The Deputy Commissioner of Taxation Australian (unreported decision of Davies J delivered on 5 November 1993)
| Applicant: | GRAHAM JAMES RANDALL |
| Respondent: | DEPUTY COMMISSIONER OF TAXATION |
| File Number: | ADG 179 of 2007 |
| Judgment of: | Simpson FM |
| Hearing dates: | 8 October 2007 & 30 November 2007 |
| Date of Last Submission: | 30 November 2007 |
| Delivered at: | Adelaide |
| Delivered on: | 27 June 2008 |
REPRESENTATION
| Applicant: | Applicant appears in person |
| Counsel for the Respondent: | Mr Sallis with Ms Vellotti |
| Solicitors for the Respondent: | Australian Taxation Office Legal Service Branch |
ORDERS
The application for a stay is dismissed.
The application for review of Registrar’s decision to make a sequestration order is dismissed.
The applicant pay the respondent’s costs of and incidental to the applications in accordance with the Bankruptcy Act 1966 (Cth), as petitioner’s costs in the bankruptcy.
The stay ordered by order 3 of the orders of 17 September 2007, as extended by order 2 of the orders made on 8 October 2007, shall cease forthwith.
The application for a further stay pending a possible appeal is refused.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 179 of 2007
| GRAHAM JAMES RANDALL |
Applicant
And
| DEPUTY COMMISSIONER OF TAXATION |
Respondent
REASONS FOR JUDGMENT
I have before me two applications by the applicant, Graham James Randall: an application for review of a sequestration order made against the applicant by a Registrar of this Court on 17 September 2007; and an application for a stay of bankruptcy proceedings brought by the respondent, the Deputy Commissioner of Taxation, pending provision by the respondent of reasons for its decision to seek and enforce a sequestration order against the applicant which decision the applicant may challenge in proceedings brought pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“AD(JR) Act”).
Background
On 17 January 2007, a judgment of $23,528.93 on account of outstanding income tax and BAS liabilities was obtained against the applicant, a practicing solicitor, in the Adelaide Magistrates Court (“the judgment”).
On 16 May 2007 the respondent served a bankruptcy notice on the applicant in which it was asserted that the applicant owed the respondent the sum of $23,425.26 (being the judgment amount plus interest of $127.64 less payments or credits of $231.31) (“the Bankruptcy Notice”).
The Bankruptcy Notice was not complied with within the time allowed by the notice with the result that on 6 June 2007 and pursuant to s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Act”), the applicant committed an act of bankruptcy.
On 9 July 2007 a creditor’s petition was presented alleging that the applicant had committed the act of bankruptcy within 6 months prior to the presentation of the petition (“the Creditor’s Petition”). Filed with the Creditor’s Petition was an affidavit of service of the Bankruptcy Notice sworn by Mr Lemmin on 6 June 2007 and an affidavit of search sworn by Christine Bretones on 9 July 2007 verifying that from her searches there was no application to set aside the Bankruptcy Notice or to extend time to comply.
On 17 July 2007 the Creditor’s Petition and the affidavit of service of the Bankruptcy Notice of Mr Lemmin sworn 6 June 2007 was served on the applicant.
On 13 August 2007 the respondent filed an affidavit of Lenneke Van Wageningen which annexed correspondence from the applicant regarding his then proposal to pay the debt the subject of the Creditor’s Petition. Annexure “A” to the affidavit comprised a letter from the applicant to the respondent dated 4 June 2007 wherein the applicant inter alia:
·Asserted that he was owed $50,000 which he was taking steps to recover and hoped that a substantial amount would be available shortly;
·Asserted that he was seeking full time employment;
·Asserted that the bankruptcy would cause him enormous personal and financial hardship from which he may “never recover” as it would stop him being able to conduct his practice as a registered tax agent and thereby destroy his only source of income; and
·Asserted that if made bankrupt the debt to the respondent would not be able to be paid as the applicants “liabilities substantially exceed my assets”.
Annexure “B” to the affidavit comprised a letter from the applicant to the respondent dated 26 July 2007 which:
·Confirmed service of the Creditor’s Petition;
·Complained of the respondent’s failure to notify the applicant before the Creditors Petition was filed to enable him to put pressure on his debtors regarding payment;
·Repeated that his liabilities exceeded his assets; and
·Complained that the respondent was pursuing bankruptcy notwithstanding the forgoing.
Annexure “C” to the affidavit comprised a letter from the respondent to the applicant dated 1 August 2007 wherein the respondent:
·Responded to the matters raised by the applicant in Exhibits “A” and “B” referred to above;
·Confirmed the applicant’s acknowledgement that his liabilities substantially exceeded his assets and that he was unable to pay his taxation liabilities within a reasonable time;
·Requested information to demonstrate that the applicant had an ability to pay all creditors within a reasonable period of time;
·Pointed out that the applicant’s debt had arisen as a result of income tax returns and business activity statements lodged by the applicant or on his behalf and that the respondent had issued notices of assessment as well as monthly running balance account statements in respect of these liabilities;
·Advised the applicant of additional fees and charges for which he was liable;
·Stated that on account of the applicant’s non-compliance with the Bankruptcy Notice served on the applicant on 16 May 2007 and on account of the applicant being insolvent the respondent was concerned that accepting payments (if any) from the applicant could be voidable against a Trustee in Bankruptcy should the applicant’s estate subsequently be the subject of a sequestration order; and
·Requested material to alleviate the respondent’s concerns regarding the applicant’s solvency.
On 13 August 2007 the Creditor’s Petition came on before a Registrar of the Court for hearing. The matter was adjourned to 3 September 2007.
On 31 August 2007 the applicant filed an affidavit (“the applicant’s first affidavit”) in which he indicated:
·That he had forwarded an account to his principal debtor (who was himself a bankrupt) which had remained unpaid and had been disputed as to amount and time for payment;
·That he had forwarded correspondence overseas to the accountant of another of his debtors in order that payment arrangements for an outstanding account could be made;
·That another of his debtors was awaiting the issue of an income tax assessment and refund before he could pay the applicant what he owed on account of outstanding fees;
·That the applicant’s father was trying to make arrangements to assist the applicant with payment of his debts; and
·That the applicant was seeking employment.
Annexure “A” to the applicant’s first affidavit was a letter from a community support worker, Ann Portolesi, of the Department for Family and Communities addressed to the respondent and dated 28 August 2007 which stated that:
·The applicant did not dispute the debt to the respondent but asserted that he had clients who owed him money the total of which exceeded the debt to the respondent;
·The applicant was able to pay his debts other than the debt to the respondent; and
·The applicant was trying to obtain payment from his clients but this required time and presented the applicant with difficulties as his major debtor was himself a bankrupt.
On 3 September 2007 the respondent filed a further affidavit of Lenneke Van Wageningen. The affidavit annexed correspondence from the respondent to the applicant dated 31 August 2007 raising concerns regarding the applicant’s first affidavit and in particular:
·The respondent’s concern that the applicant’s principal debtor owed him approximately $33,000 and the applicant was still negotiating his bill with that debtor with the amount to be paid yet to be agreed;
·The respondent’s concern regarding both the amount that the applicant asserted he was owed by the “overseas” debtor and the debtor whose tax refund was due and payable;
·The respondent’s concern regarding the nebulous nature of the applicant’s father’s efforts to assist with payments of the applicant’s taxation liability; and
·The respondent’s concern regarding the escalating tax liability of the applicant on account of the ever accumulating general interest charge, judgment interest and disbursements incurred by the respondent in association with the bankruptcy.
By affidavit of the applicant filed on 3 September 2007 (“the applicant’s second affidavit”) the applicant referred to his first affidavit on 31 August 2007 and indicated that subsequent to making that affidavit he had discovered the following untruths contained therein:
·That the correspondence said to have been sent to the debtor’s accountant overseas had not been sent; and
·That the income tax return of the debtor who hoped to pay the applicant from money expected to be refunded by the respondent, which tax return was said would be lodged on 31 August 2007 had not yet been lodged but would be so lodged within 24 hours.
It was further stated in the applicant’s second affidavit that:
·The applicant’s father had indicated that he would not help the applicant meet his unpaid debts to the respondent; and
·A total of $37,767 in outstanding fees was owed to the applicant by his principal debtor, the overseas debtor and the client whose tax return was about to be lodged.
On 3 September 2007 the applicant’s creditor’s petition was again called on before a Registrar of the Court for hearing. The matter was adjourned to 17 September 2007.
On 14 September 2007 the applicant filed a further affidavit sworn on 14 September 2007 (“the applicant’s third affidavit”) indicating that his principal debtor (identified as a bankrupt who owed him $33,000) had disputed his account for the first time. Annexure “A” to the applicant’s third affidavit was a letter comprising a facsimile from the applicant to the respondent dated 12 September 2007 wherein the applicant indicated:
·His wish that the respondent defer the bankruptcy proceedings on account of the ramifications for the applicant, both personal and professional;
·That he was unhappy that the respondent had continually resisted adjournment of the proceedings;
·That he was unhappy that the respondent appeared to be committed to having him declared bankrupt; and
·Indicated that he had obtained part-time employment as a cleaner earning him a gross income of approximately $225 per week.
The letter failed to provide information as to when and from which source of funds the debt the subject of the Creditor’s Petition was likely to be paid.
On 17 September 2007 the applicant filed a further affidavit (“the applicant’s fourth affidavit”). Annexure “A” to the affidavit comprised a detailed letter from the applicant to the respondent dated 16 September 2007 regarding the following:
·Discussion of previous correspondence exchanged between the applicant and the respondent and the applicant’s concern that the respondent would not say what sum it would require the applicant to pay to agree to defer obtaining a sequestration order;
·Asserting a failure by the respondent to take into account the prospect of the applicant’s income from cleaning services increasing over time which increase would be applied in discharge of the applicant’s debt to the respondent;
·Asserting that the respondent gave no consideration to the applicant’s submission that bankruptcy would have a far greater impact on him than a non-professional member of the community;
·Asserting that the respondent gave no consideration to the applicant’s assertion that the applicant had taken steps to immediately derive more income and placed himself under severe time pressure regarding conducting his practice as well as preparing and attending on professional employment interviews;
·Asserting that the professional employment positions that the applicant had applied for would provide annual income in excess of $50,000 and in the event that he was able to secure same, after allowing for “$565 per week to meet existing living and other basic commitments”, would enable him to have $173 per week available to pay off the debt to the respondent;
·Repeated the applicant’s difficulties in collecting his outstanding accounts and indicating that his principal debtor (the bankrupt who owed him $33,000) had changed his attitude towards paying his account, however, the respondent could expect to receive $7,767 (excluding GST) from the two other debtors previously identified immediately upon receipt of those monies; and
·Expressed criticism of the conduct of the respondent in seeking a sequestration order as being in breach of the respondent’s policy known as the ATO Receivables Policy (4 July 2006 version) and in particular that part of the policy dealing with debt collection and bankruptcy.
Annexure “B” to the applicant’s fourth affidavit comprised a complaint to the respondent’s Complaint’s Division dated 17 September 2007 referring to earlier correspondence that morning and enclosing the letter that was annexure “A” referred to in the preceding paragraph.
Annexure “C” to the affidavit comprised a complaint to the Inspector General of Taxation dated 17 September 2007 again enclosing a copy of the letter that was annexure “A”.
Annexure “D” to the affidavit was a letter of response from the respondent dated 6 September 2007 to a complaint lodged with the respondent by the applicant by facsimile dated 31 August 2007 but received by the respondent on 3 September 2007.
Annexure “E” to the affidavit comprised the applicant’s complaint to the Commonwealth Ombudsman dated 17 September 2007 about the respondent’s conduct also dated 17 September 2007 and also enclosing the letter that comprised annexure “A”.
On 17 September 2007 the respondent filed a further affidavit of Ms Van Wageningen. The affidavit attached as Annexure “A” the respondent’s faxed letter to the applicant dated 17 September 2007 which in summary stated:
·That the respondent declined to state the amount of a lump sum that the applicant would need to pay to have the bankruptcy proceedings adjourned;
·Repeated that a previous offer of $225 per week by the applicant to repay the judgment debt was considered by the respondent but was deemed unacceptable to the respondent;
·Indicated that the respondent would not take into account potential income where there was no evidence as to when and how much such income would be available;
·Noted firstly that the applicant’s asserted desire to pay his debts and efforts regarding obtaining employment and secondly noted that the respondent would not enter into an arrangement on the basis of potential income in the future;
·Expressed concerns regarding the applicant’s ability to make any payments to the respondent particularly in light of the applicant’s assertion of a decrease in his income in the future; and
·Refuted the applicant’s suggestion that the respondent was not adhering to the ATO’s Receivables Policy.
Also on 17 September 2007 the respondent filed an affidavit of Peter Hasse. The affidavit established that the amount outstanding by the applicant to the respondent in relation to the Creditor’s Petition was still wholly due and unsatisfied. A further affidavit of Ms Van Wageningen was also filed by the respondent on 17 September 2007 confirming that searches had been conducted of the National Personal Insolvency Index of the Insolvency Trustee Service of Australia and that there are no details of a debt agreement in relation to the debt on which the applicant creditor relied and that there were no bankruptcy proceedings in the district which were pending against the applicant other than the petition of the respondent and that the applicant was not a bankrupt.
At the hearing on 17 September 2007 Registrar Christie made the following orders:
1. A sequestration order be made against the Estate of Graham James Randall.
2. The applicant creditor’s costs be fixed at $910 and be paid from the Estate of the respondent debtor in accordance with the Bankruptcy Act 1966.
3. Pursuant to s.52(3) of the Bankruptcy Act 1966 stay all proceedings under the Sequestration Order for a period of 21 days.
On 5 October 2007 the applicant filed his application for review of Registrar Christie’s decision. The application was supported by an affidavit of the applicant sworn on 5 October 2007 (“the applicant’s fifth affidavit”) and filed the same day. As the application for review was lodged out of the time allowed by r.20.01 of the Federal Magistrates Court Rules, the applicant sought an extension of time.
The applicant stated in his fifth affidavit that, in making the sequestration order, the Registrar “took into account things which should not have been taken into account and did not take into account things that should have been taken into account”. No particulars were provided. The applicant also stated in his affidavit that the respondent had:
“… incorrectly, inappropriately and with prejudice to me continued to seek the making of a sequestration order against me contrary to a fair exercise of discretion in relation to the continuation of and enforcement of debt collection activities against me and in direct conflict with its own published guidelines with regard to taking action to seek a sequestration order against a defaulting tax payer.”
The applicant’s fifth affidavit further stated that particulars would be provided on receipt of the respondent’s response to the applicant’s request pursuant to the Freedom of Information Act 1982 (Cth), receipt of the respondent’s reply to the applicant’s complaint to the respondent’s internal complaints area and receipt of a reply to the applicant’s referral of the respondent’s conduct to the Commonwealth Ombudsman.
When the matter came before the Court on 8 October 2007 orders were made extending the time within which the applicant had to apply to the Court to seek a review of the decision of Registrar Christie made on 17 September 2007 to and including 8 October 2007. A further order was made that order 3 of the orders of 17 September 2007 be extended until further order. The matter was then listed for hearing on 30 November 2007.
On 29 November 2007 the applicant filed a notice of motion seeking the following order:
1. That any proceedings between the parties involving the collection of outstanding debts of the applicant be stayed pending the provision of reasons for the decision to do so and continuing to do so – which have yet to be provided by the respondent – so that an application may be made pursuant to the provisions of the Administrative Decisions (Judicial Review Act) (sic) 1977.
The application was supported by an affidavit of the applicant sworn and filed on 29 November 2007 (“the applicant’s sixth affidavit”). The affidavit deposed to the fact that the applicant had sent a letter to the respondent on 22 November 2007 which was in the following terms:
Pursuant to the Administrative Decision (Judicial Review) Act 1977 I request that you provide me with the reasons:
for your decision to pursue my taxation debt by legal action;
for your decision to continue legal action including the decision to commence the subsequent bankruptcy proceedings against me; and
for your decision to continue with such action on each occasion since that pursue commenced that I:
requested that you cease such actions;
requested that you reconsider your decision to continue;
made offers in relation to the payment of the debt involved; or
provided additional information to you
including the findings of fact, the evidence or other material used or referred to in the making of that decision or series of decisions.
The applicant’s sixth affidavit also annexed a letter from the respondent dated 28 November 2007. It stated:
Request pursuant to Administrative Decisions (Judicial Review) Act 1977 (“The AD(JR) Act”)
1.We refer to your letter received on 22 November 2007 requesting reasons for decisions pursuant to the AD(JR) Act (“the letter”).
2.The letter has been provided for consideration to the Officer of the Operations Business Line in the Tax Office that made the decisions you are requesting a statement of reasons.
3.We refer to Chapter 2 at paragraph 2.7 of the ATO Receivables Policy that details the policy of the Tax Office with respect to the review of decisions pursuant to AD(JR) Act.
4.We note s.13 of the AD(JR) Act and the requirement for a statement of reasons to be provided by the decision maker within 28 days of receipt of the request.
5.Please call Dalila Vellotti on 8208 1548 if you have any inquiries in relation to this matter.
Yours faithfully
BRONWYN SIMMONDS
ASSISTANT COMMISSIONERPer: Dalila Vellotti
The notice of motion was returnable before the Court on 30 November 2007, the day that had been set for the hearing of the application for review.
The hearing
At the hearing on 30 November 2007 I first heard full submissions in relation to the notice of motion for a stay and reserved my decision.
I then heard submissions in relation to the application for review and again reserved my decision. Near the end of submissions in relation to the application for review the applicant sought leave to file a further affidavit dealing with his recent efforts to obtain money to meet the respondent’s debt. Over the respondent’s opposition, I gave the applicant permission to file such an affidavit. I also gave the respondent leave to have the matter called back on for further submissions once the applicant’s further affidavit was filed and served.
On 4 December 2007 the applicant filed his further affidavit (“the applicant’s seventh affidavit”) in which he stated that:
·At the time of the hearing he was working as a courier driver working 50 hours per week as well as continuing his legal practice;
·He earned an average of $640 per week and had expenses of $480 per week leaving him $160 per week to forward to the respondent; and
·That if the threat of bankruptcy was removed his family may provide him with financial assistance.
The respondent did not seek to have the matter called on for further submissions.
I propose to first consider the application seeking a stay pending the provision of reasons for decision by the respondent to continue with bankruptcy proceedings against the applicant and to then consider the application for review.
Application for stay
Earlier in these reasons I have provided details of the application for a stay.[1] Although the applications seeks a stay of “… any proceedings between the parties involving the collection of outstanding debts of the applicant”, on the basis of the applicant’s other material and his submissions, I take the application to be one seeking a stay of the proceedings brought by the respondent against the applicant in which the sequestration order has been made. I will proceed on this basis.
[1] Para.29 of these reasons.
It is the applicant’s case that, once he has the respondent’s reasons for the decision, he will consider whether or not to bring proceedings against the respondent challenging the decision pursuant to the provisions of the AD(JR) Act.
During submissions the applicant, who was not legally represented but, as previously stated, is a legal practitioner of many years standing, accepted that it was necessary for him to establish that the relevant “decision” would be a reviewable decision. The applicant referred me to the case of Strictly Stainless Pty Ltd v The Deputy Commissioner of Taxation, an unreported decision of Davies J delivered on 5 November 1993. The brief facts of that case were that Strictly Stainless was indebted to the Deputy Commissioner of Taxation who had commenced proceedings in the Supreme Court of New South Wales seeking an order for its winding up. Strictly Stainless brought proceedings in the Federal Court pursuant to the AD(JR) Act seeking orders of review in respect of steps which were described by Davies J as:
…the decision of the Deputy Commissioner to commence the proceedings in the Supreme Court and the decision of the Deputy Commissioner to reject an arrangement to settle the proceedings in the Supreme Court and not consider any further proposals.
The “decisions” complained of in Strictly Stainless were therefore very similar to the decisions that the applicant may wish to complain of in the present case.
Davies J referred a passage in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at p.337 in which the Mason CJ, as he then was discussed the nature of a decision for the purposes of the AD(JR) Act. He noted that the Chief Justice’s remarks found agreement with other members of the Court, Brennan, Deane, Toohey and Gaudrin JJ, when his Honour said:
“A reviewable “decision” is one for which provision is made by or under a statute. It will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would ordinarily amount to a reviewable decision unless the statue provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment. … Another essential quality of a reviewable decision is that it be a substantive determination.”
Davies J found find that there was nothing in the nature of an ultimate or operative determination, or of a substantive determination in taking the step of issuing the summons or in the carrying on of negotiations for settlement. He later said:
“There is no allegation of improper purpose. Principally, it is alleged that it was unreasonable for the Deputy Commissioner of Taxation to take proceedings in the Supreme Court. It seems to me that that allegation does not provide a ground on which this Court would interfere, particularly as it is an important principal of public policy that a person should be entitled to approach a court and have his case determined according to law whether or not the institution of the proceedings be reasonable. A court must stand apart from the institution of the proceedings. A court must listen to people who wish to make a claim, whether the claim, is made reasonably or otherwise. Some litigants bring claims in circumstances which the courts from time (sic) think to be very harsh. But if a person brings a claim, and is entitled to relief, then the Court will grant relief.”
and later:
“It seems to me to be quite inappropriate for this Court to consider whether or not it was reasonable for the Deputy Commissioner to institute wind up proceedings in the Supreme Court. This Court should stand right away from the question and allow the Supreme Court to deal with the matter in the ordinary way.”
The case of Strictly Stainless does not provide the applicant with any support for his application for a stay. As in Strictly Stainless, the “decision” that the applicant here might seek judicial review of is the respondent’s decision to proceed with insolvency proceedings rather than enter into negotiations to either give the applicant time to pay or to compromise the debt. I am not satisfied that these are decisions that would be capable of review under the AD(JR) Act. Nor on the authorities am I satisfied that a decision by the Deputy Commissioner of Taxation taken pursuant to the ATO Receivables Policy is a decision that is capable of review under the AD(JR) Act (see Bilborough v Deputy Commissioner of Taxation (2007) 95 ALD 371 at paras.24 to 27).
In his oral submissions the applicant suggested that he was unable to put all the submissions that he would wish until after the respondent had provided the documents sought by him under the Freedom of Information Act 1982 (Cth). In my view nothing that the applicant has sought pursuant to FOI concerning the reasons that the respondent’s decision to commence and prosecute these proceedings rather than enter into negotiations could provide a basis for a successful challenge pursuant to the AD(JR) Act. The application for a stay is therefore refused.
Application for review
I next consider the application to review the Registrar’s decision to make a sequestration order. Such an application is to proceed as a hearing de novo of the creditor’s petition (see Harris v Caladine (1991) 172 CLR 84; Adelaide Bank Limited v Badcock [2002] FMCA 10 at paras.10-16).
The applicant’s submissions are conveniently contained in his Outline of Argument document filed prior to the hearing. They are as follows:
·The Australian Taxation Office (ATO) has breached its legal duty to act fairly when exercising the administrative decisions inherent in determining the most appropriate manner to proceed with the collection of unpaid debts in a timely manner from taxpayers generally and specifically in relation to me in particular.
·The ATO has mal-administered the provisions of the relevant acts in the conduct of this matter to such a degree that its actions against me are an abuse of process, inappropriately used as a very potent instrument of oppression against me and they have been an entirely improper and unsuitable course of action in light of my circumstances and malicious.
·The ATO has incorrectly, inappropriately and with prejudice to me continued to seek the making of a sequestration order against me contrary to a fair exercise of discretion in relation to the continuation of and enforcement of debt collection activities against me.
·The ATO has acted in direct conflict with its own published guidelines with regard to taking action to seek a sequestration order against taxpayer who have not paid income tax debts and has continued to do so notwithstanding all offers of payment made by me.
·The ATO has acted in direct conflict with its own published guidelines with regard to taking action to seek a sequestration order against taxpayers who have not paid income tax debts and has continued to do so notwithstanding that I have brought that conflict to its attention.
·The ATO has acted against the best interests of the taxpayers it – in broad terms – in essence represents by continuing bankruptcy action against me (which will lead to the collection of none of the debt) rather than collecting the debt through a negotiated payment schedule with me.
·The ATO has acted against the best interests of and with prejudice to my other creditors (credit card providers) – whose debts I am paying as they fall due – by forcing the making of a sequestration order against me, as such action will mean those creditors receive no payment and will not collect any of the outstanding debt.
·The ATO has breached the original agreement made with me regarding my consent to judgment by the ATO continuing bankruptcy action against me.
·The ATO has ignored each and every submission I have made regarding the deleterious effect bankruptcy will have on me, that impact being far in excess of the impact bankruptcy has on an ordinary debtor.
·It is in the interests of creditors generally that some other course than the making of a sequestration order be followed.
·The Court should exercise its discretion and having regard to the interests of all creditors, the public an my circumstances, the Court should order that the sequestration order be set aside or annulled.
·As has constantly been brought to the attention of the ATO, there is reasonable prospect that given time I will be able to pay the debt in full.
·As has constantly been brought to the attention of the ATO, my circumstances are likely to improve in the future and such improvement will add weight to my claim that given time I will be able to pay the debt in full.
·There is about to be an application made by me under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Application) and this Court should not determine any matter or make any further or additional order in relation to this application which negatively impacts on the Applicant until that application is resolved.
Where the Court is satisfied with proof of the matters set out in subsection 52(1)[2] of the Bankruptcy Act the Court may affirm the sequestration order made by the Registrar unless the debtor establishes the special circumstances referred to in sub-ss.52(2)(a) or (b).[3]
[2] (1) At the hearing of a creditor’s petition, the Court shall require proof of:
(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b)service of the petition; and
(c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
[3] (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
The applicant carries the onus of proving that he is able to pay his debts within a reasonable time. (Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163; Sarina v Wollondilly Shire Council (1980) 48 FLR 372) The applicant here has failed to do so. His affidavit of 4 December 2007 confirms that he can not do so. He seeks time to pay but the respondent has no obligation to give him that time. The question that remains is therefore whether there is any “other sufficient cause a sequestration order ought not to be made”.
The applicant says that he has claims against others that, if paid, would enable him to pay the respondent all that is owing. I am not satisfied that those claims have sufficient validity to justify any further adjournment of the petition. The applicant has not put any evidence before the Court of the legal steps that he has taken to recover these monies nor any reason why litigation has not been possible. In these circumstances it would not be appropriate to further delay the implementation of the sequestration order.
For the reasons dealt with earlier in these reasons in relation to the application for a stay, those submissions of the applicant that are critical of the respondent’s “decision” to proceed with the litigation rather than negotiate and compromise the debt are without merit.
The applicant also submits that, as a practicing lawyer, his bankruptcy will cause him personal hardship having a much greater impact on him than other members of the public. Counsel for the respondent referred me to the decision of Deputy Commissioner of Taxation v McCormick (No.2) (2005) 218 ALR 665 in which McInnis FM stated that the personal insolvency of a legal practitioner that might result in him not being able to continue to practice necessarily requires the Court to exercise its discretion in relation to a sequestration order in the debtors favour.[4] I agree. I do not consider it appropriate to exercise a discretion in the applicant’s favour on this basis in this case.
[4] At para.33
The remaining submissions of the applicant that I need to address can be characterised as submissions that the prosecution of the proceedings for a sequestration order is an abuse of process. Such submissions carry a heavy onus (see Williams v Spautz (1992) 174 CLR 509 at p.529). A person alleging abuse of process must show that the predominant purpose of the other party in using the legal process has been one other than for which it was designed (Williams v Spautz supra at p.529.4). I find that there is nothing here that indicates such a purpose. The matters that the applicant relies upon (ie the respondent’s decision to proceed with this litigation rather than negotiate and the impact that the applicant suggests the sequestration will have on his other creditors) do no amount to an abuse of process.
There is therefore no proper basis made out by the applicant for me to invoke s.52(2) of the Act. None of the applicant’s submissions detailed earlier in these reasons have any merit. The application for review is therefore dismissed.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Simpson FM
Associate: Julie Davey
Date: 27 June 2008
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