Re Bennett, D. also known as Drago Komljenovic Ex Parte Deputy Commissioner of Taxation of the Commonwealth of Australia

[1993] FCA 241

JUDGMENT No. ,,,., &9.'.!...1 ..!.S22

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) No. P1314 of 1992
BANKRUPTCY DISTRICT OF THE STATE	)
OF VICTORIA	1

RE:

- DAVID BENNETT also known a S DRAG0 KOMLJENOVIC

Debtor

EX PARTE:

Creditor

CORAM:	Jenkinson J.
PLACE :	Melbourne

RECEIVED

- DATE : 21 Aprll, 1993

2 3 APR 1993

FEDERAL COURT OF

AUSTRALIA

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.	The hearing of the petition be adjourned unt~l	G
October 1993.

2.        The costs of the petitioning creditor and the Attorney-General for the State of Victoria of the hearing on 24 February 1993 and this day be reserved.

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

1. An office copy of this order be served by the

   petitioning creditor on the debtor.

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) No. P1314 of 1992
BANKRUPTCY DISTRICT OF THE STATE	)
OF VICTORIA	)

RE:

- DAVID BENNETT also known as DRAG0 KOMLJENOVIC

Debtor

EX PARTE:	DEPUTY COMMISSIONER OF TAXAT I ON OF THE
C O M M O N W E A L T H  0 F
AUSTRALIA

Creditor

CORAM:	Jenkinson J.
PLACE:	Melbourne
DATE:	21 April, 1993

REASONS FOR JUDGMENT

Motion for an order that the hearing of a bankruptcy

petition be adjourned.

The petition is founded on the debtor's fallure to comply on or before 29 October 1992 with the requirements of a

bankruptcy notice, which had been issued on 14 October 1992 and served on him on 15 October 1992, in respect of a judgment for income tax. The petition, whlch was presented on 30 October 1992, alleges an indebtedness of $435,870.94. The petition came on for hearing before me on 24 February 1993. Miss Symon of counsel for the petitioning creditor moved that the hearing proceed. The debtor did not appear. Mr. Lasry

Q.C. and Mr. Scheid appeared for the Attorney-General for the

State of Victoria to move that the hearing of the petition be adjourned.

On 9 October 1992 the debtor was convicted in the County Court of Victor~a of two indictable offences against the law of Victoria. Each offence being a "serious offence", within the meaning of that expression in the Crimes fConfiscation o f P r o f i t s ) Act 1986 (Vic.), s.5 of that Act authorized the Director of Public Prosecutions for the State of Victoria to apply to the court before which the debtor had been convicted for one or both of a "forfeiture order in respect of tainted property" and "a pecuniary penalty order". "Tainted property" is so defined Chat anything which is comprehended by the expression may be, but will not necessarily be, property of the convicted person. "A pecuniary penalty order" is an order that the convicted person pay to the Crown in right of the State of Victoria a pecuniary

penalty equal to the value, assessed in accordance w ~ t h s.12

of the Crimes	lconfiscatlon o f P r o f i t s ) Act	19116, of the
offence. The amount payable under a pecuniary penalty order	benefits derived by that person as a result of committing the	is, for all purposes, to be taken to be a civil debt due by the person to the Crown, and such an order may be enforced as if it were an order made by the court in civil proceedings instituted by the Crown against the person concerned to
recover a debt due by that person to the Crown : sub-secs. 12(2) and (3).
On 19 October 1992 the Director of Public Prosecutions applied to the judge of the County Court before whom the debtor was convicted for a forfeiture order, in respect of several parcels of land which are alleged to be "tainted property", and some or all of which may be owned by the debtor, and for a pecuniary penalty order. These applications have been adjourned, at first at the instance of the petitioning creditor, and later at the instance of the Official Trustee in Bankruptcy. The Official Trustee had been directed, on the petitioning creditor's applicat~on, to take control of the debtor's property, pursuant to s.50 of the Bankru~tcv Act 1966. The order was made on the day the petition was presented. Before he made the order, Northrop J. heard submissions by counsel for the debtor and by counsel for the Director of Public Prosecutions. On 23 February 1993 the Offlclal Trustee instituted in the orlglnal jurisdiction of the High Court of Australia an action claiming against the Dlrector of Public Prosecutions a declaration that the property of the debtor under the ccntrol of the Official
Trustee pursuant to the order of Northrop J. "may not be forfeited to the State of Victoria pursuant to the Crimes
/Confiscation of Profits J Act 1986 (Vict. ) " . The ground of the claim disclosed by the statement of claim endorsed on the writ is that "to the extent that [the Crlmes [Confiscation of Profits) Act 19861 permits the making of an order for the forfeiture of property of [the debtor] that is in the control of the plaintiff pursuant to the order of the Federal Court of Australia made 30 October 1992 and that may become vested in the plaintiff upon the making of a sequestration order agalnst the estate of [the debtor], it is invalid because of the provisions of s.109 of the Constitution"

The Bankru~tcv Act 1966 includes the following

provisions:

"82(1) Subject to this Division, all debts and

liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to wh.~ch he may become subject before his discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his bankruptcy.

or fines imposed by a court ln respect of an	(3) Subject to subsection (3A), penalties
offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.
penalty order or an interstate pecuniary (3A) An amount payable under a pecuniary
penalty order is provable in bankruptcy."

It is provided by s.5(1) that each of the expressions

order" has in the aankruptcv Act 1966 the same meaning as In	"pecuniary penalty order" and "interstate pecuniary penalty
the Proceeds of Crime Act 1987 (Cwth.). That Commonwealth Act is similar to the Victorian Act. The expression "pecuniary penalty order" in the Commonwealth Act is defined to mean an order under s.26(1) of the Commonwealth Act, which empowers an appropriate court, on application by the Director of Public Prosecutions for the Commonwealth, after conviction of a person of an indictable offence against a law of the Commonwealth or a law of a Territory (other than the Australian Capital Territory and the Northern Territory), to assess, in accordance with s.27, the value of the beneflts derived by the person from the commission of the offence and to order the person to pay to the Commonwealth a pecuniary penalty equal to that value. The expression "interstate pecuniary penalty order" is so defined as to comprehend, by provision made in the Proceeds of Crime Regulations (Cwth.), a pecuniary penalty order under s.12(1) of the Crimes
/Confiscation of Profits) Act 1986 (Vic. ) . Section 153 of the
Bankru~tcv Act 1966 includes the following provisions:

"(1) Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured credltor has surrendered his security for the benefit of creditors generally.

bankruptcy does not:  (2) The discharge of a bankrupt from

(d) release the bankrupt from any liability under a pecuniary penalty order or interstate pecuniary penalty order."

Miss Symon of counsel for the petitioning creditor submitted that an interstate pecuniary penalty order made after the making of an order for sequestration of the estate of the person against whom the pecuniary penalty order was made is provable in the bankruptcy. A fortiori, such a pecuniary penalty order is provable in the bankruptcy where, as is here the case, the authority conferred by s.5 of the Crlmes (Confiscation of Prof.Lts1 Act 1986 on the Director of Public Prosecutions to apply for that order had existed, and had been exercised, before the making of the sequestration

order. The construction of s.82 of the Bankru~tcv Act 1966

which underlies that submission was, she said, confirmed by the Attorney-General's speech on the second reading of the Bill which, upon enactment, inserted sub-sections (3) and (3A) of 5.82. The speech included the following passage:

"The amendment to section 82 of the Bankruptcy Act effected by clause 8 enables pecuniary penalties and interstate pecuniary penalty orders to be proved as civil debts payable to the Commonwealth in bankruptcy whether such orders are made before or during the bankruptcy." (Hansard, 30 April 1987, p.2318)

Mr. Lasry pointed out that the learned authors of
McDonald, Henry and Meek : Australian Bankruptcy Law and

Practice, had followed their citation of that passage from

Hansard with : "Quaere, however, whether the terms of s.82 as	a whole are capable of giving effect to that intention".
(p.2732). He submitted that there would not be, at the date
of the bankruptcy, even a contingent liability of the kind which s.12 of the Crimes fConfiscation of Profits1 Act 1986 contemplated because the section conferred on the court a discretion whether or not to make a pecuniary penalty order. In any event, it was submitted, the State of Victoria should not be exposed to the risk that an interstate pecuniary penalty order made after sequestration might not be provable in the bankruptcy when there was no suggestion that the interests of creditors other than the petitioning creditor might be prejudiced by deferral of the making of a sequestration order.
It does not seem to me certain that; an Lnterstate pecuniary penalty order made after sequestration on the application now pendlng in the County Court would be provable in the bankruptcy. And the making of a sequestration order before judgment in the action in the High Court might result in that court's abstention from determining the Official Trustee's claim. There are not at present any circumstances disclosed by evidence before me which outweigh the considerations in favour of deferral of the hearing of the petition, in my opinion. I propose to adjourn the hearing of the petition until a date before the expiration of the time specified in s.52(4)(a) of the Bankruatcv Act 1966.
Miss Symon submitted that the Attorney-General for the State of Victoria lacked standing to make the application for adjournment. But if her submission concerning the construction of s.82 of the Bankruptcy Act 1966 were accepted, the Attorney-General could claim standing as a creditor. Not having formed a conclusion as to the correctness of that
submission, I will reserve the costs of the petitioning creditor and of the Attorney-General.

I certlfy that this and the 7 preceding pages are a true copy of the Reasons for Judgment of the Honourable Mr. Justice Jenkinson.

L -L * - r ,

Associate

Dated: 21 April, 1993

Counsel for the Creditor	Ms. H.M. Symon
Solicitor for the Credltor	Australian Government Solicitor
Counsel for the Attorney-General :	Mr. L. Lasry Q.C. and
for the State of Victoria	Mr. R. Scheid
Solicitor for the Attorney-	Solicitor t o the
General for the State of	Director of Public
Victorla	Prosecutions for the State of Victoria
Date of Hearing	24 February, 1993