Re Kassab, A v Ex parte Deputy Commissioner of Taxation for the Commonwealth of Australia
[1994] FCA 973
•13 DECEMBER 1994
RE: ABDULLAH KASSAB
EX PARTE: DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
No VP1256 of 1993
FED No. 973/94
Number of pages - 12
Bankruptcy
(1994) 94 ATC 5043
(1994) 127 ALR 261
(1994) 55 FCR 305
COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
BLACK CJ, SWEENEY AND SHEPPARD JJ
CATCHWORDS
Bankruptcy - special case stated - whether personal service of a creditor's petition required when petitioning creditor is the Deputy Commissioner of Taxation.
Bankruptcy Act 1966, ss 5, 47, 52, 58(3), 309
Bankruptcy Rules, Rule 15
Income Tax Assessment Act 1936, s 214(1)
Income Tax and Social Services Contribution Assessment Act 1936, s 221
Re John Spernovassilis; Ex parte Deputy Commissioner of Taxation for the Commonwealth of Australia (Unreported decision 14 July 1995)
Duperouzel v Cameron (1973) WAR 181
Re Williams (1968) 13 FCR 10
Re Honan (Unreported NSW Nos P136 and 137 of 1948)
Re Maddox ex parte The Debtor (1978) 36 FLR 392
Bond v George A Bond and Co Ltd (1930) 44 CLR 11
James v Deputy Commissioner of Taxation (1957) 97 CLR 23
Parsons v Bunge (1940) 64 CLR 421
HEARING
MELBOURNE, 12 October 1994
#DATE 13:12:1994
Counsel briefed as amicus curiae: Mr J Santamaria
Solicitors acting as amicus curiae: Cornwall Stodart
Counsel for the Petitioning Creditor: Mr G Nettle QC
Mr M Crennan
Solicitors for the Petitioning Creditor: Australian Government
Solicitor
ORDER
THE COURT ORDERS THAT:
1. The question stated in the special case be answered "No".
2. The petition be referred to a single judge of the Court.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
BLACK CJ, SWEENEY AND SHEPPARD JJ By the order of Sweeney J made on 7 September 1994 the following special case has been stated pursuant to sub-section 25(6) of the Federal Court of Australia Act 1976 for the consideration of a Full Court:
" 1. On 19 November 1993 the petitioning creditor filed the creditor's petition herein alleging that on 19 May 1993 "the Debtor departed Australia with the intention of defeating or delaying a creditor". (cf s. 40(1)(c)(i) of the Bankruptcy Act 1966).
2. At the hearing of the petition, the petitioning creditor will be obliged to prove service on the debtor of the documents required by the Bankruptcy Act 1966 and the Bankruptcy Rules to be served on the debtor. The petitioning creditor will rely on evidence to establish that the debtor has at all relevant times been absent from Australia and has not to the knowledge of the petitioning creditor after reasonable inquiry in that behalf an attorney or agent in Australia on whom service of process can be effected. The petitioning creditor will further rely on evidence that he posted the required documents to the debtor in letters addressed to him at his last known place of business or abode in Australia as defined in the Income Tax Assessment Act 1936 (Cth) and the Income Tax Regulations.
3. In these circumstances the petitioning creditor contends that, in effecting service, he was entitled to rely on the provisions of s. 214 of the Income Tax Assessment Act 1936 (Cth). Section 214 of the said Act provides:
"(1) If a taxpayer:
(a) is absent from Australia and has not to the knowledge of the Commissioner after reasonable inquiry in that behalf any attorney or agent in Australia on whom service of process can be effected; or
(b) cannot after reasonable inquiry be found, service of any process in proceedings against him for recovery of income tax may, without leave of the Court, be effected on him by posting the same or a sealed copy thereof in a letter addressed to him at his last known place of business or abode in Australia."
4. No application has been made to the Court for an order for substituted service of the petition.
5. The petitioning creditor will rely on the decision of Mr Justice Olney in Re John Spernovassilis; Ex parte Deputy Commissioner of Taxation for the Commonwealth of Australia (unreported decision 14 July 1994).
6. The question referred by way of this special case for the consideration of a Full Court is whether proof of service in accordance with s. 214(1) of the Income Tax Assessment Act 1936 (Cth) amounts to evidence upon which the court may be satisfied of the service of the petition under s. 52(1)(b) of the Bankruptcy Act 1966.
Annexures
1. Creditor's Petition (Document 1 on Bankruptcy File).
2. Affidavit verifying creditor's Petition (Document 2).
3. Affidavit verifying creditor's Petition (Document 3).
4. Affidavit relating to service of creditor's Petition and annexure thereto (Documents 7 and 8)."
The relevant provisions of s. 52 of the Bankruptcy Act 1966 ("the Act") are as follows:
"(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.
(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a) that he is able to pay his debts; or
(b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition."
Section 47 of the Act provides that a creditor's petition shall be served as prescribed. Section 5 of the Act provides, amongst other things that "in this Act, unless the contrary intention appears 'prescribed' means prescribed by this Act or by rules under this Act."
Burt J, in Duperouzel v Cameron (1973) WAR 181 at 182 said:
"In its application to this statute the result is that where the expression 'licensed premises' appears then 'unless a contrary or other intention appears' it is to be understood in the defined sense and so as not to include a boat. This is because the word 'means' is a word of true definition and as such the words following it stand as an exclusive statement of what the subject expression includes. As by the Act the defined expression is to carry that meaning 'unless a contrary or other intention appears' the possibility always exists that an intention that it should bear a different meaning may appear, and should it appear, the definition must be departed from so as to accommodate that intention. But the contrary or other intention must, or so it seems to me, be found within the particular context in which the defined word appears, and when found, the definition is then departed from for the purposes of that particular provision only."
It was not submitted that any contrary intention appeared in the Act to deprive the word "prescribed" of the meaning assigned to it by s. 5 of the Act. The question is thus whether the provisions of s. 214 of the Income Tax Assessment Act are to be construed as overriding the relevant provisions of the Bankruptcy Act and the Rules made pursuant to it.
Rule 15 of the Bankruptcy Rules provides:
"15. Unless otherwise ordered by the Court under subsection 309(2) of the Act:
(a) service of a bankruptcy notice shall be effected on the debtor by delivering to the debtor personally a copy of the bankruptcy notice signed and stamped by the Registrar; and
(b) service of a creditor's petition shall be effected on a debtor by delivering:
(i) an official copy of the petition ;
(ii) a copy of the affidavit or of each affidavit verifying the petition; and
(iii) where a registered trustee has consented, as referred to in paragraph 12(3)(ba), to act as the trustee - a copy of the consent,
to the debtor personally:
(iv) if service is effected in Australia - not less than 8 days before the hearing date for the petition; or
(v) in any other case - not less than such reasonable time before the hearing date for the petition as is determined by the Registrar."
It will be noted that Rule 15 thus makes express provision for service of a creditor's petition outside Australia and enables the Registrar to determine a reasonable time before the hearing date for service, no doubt bearing in mind where it is envisaged that service will be effected upon the debtor, so that the debtor will have an opportunity to appear to oppose the petition.
Subsection 309(2) reads as follows:
"Where a notice or other document is required by this Act to be served on or given to a person, the Court may, in a particular case, order that it be given or served in a manner specified by the Court, whether or not any other manner of giving or serving the notice or other document is prescribed."
As Gibbs J pointed out in Re Williams (1968) 13 FLR 10 at p 21:
"It is well established that to obtain an order for substituted service it is not enough to show that the debtor is keeping out of the way to avoid service or that for some other cause prompt personal service cannot be effected, but it is also necessary to show that the method of substituted service asked for will in all reasonable probability be effective to bring knowledge of the proceedings to the debtor (see Re Cook (2) and Re Stewart; Ex parte Barrett
(3)).
(2) (1946) 13 ABC 245, at p262
(3) (1967) 10 FLR 99."
In Re Honan (unreported NSW Nos P136 and 137 of 1948) two petitions were dismissed where documents forwarded to debtors by registered post pursuant to orders for substituted service were returned unclaimed and it appeared that the petitions had not come to the notice of the debtors (see McDonald Henry and Meek 5th Edition para. 1274).
This attitude has been adopted by courts exercising jurisdiction in bankruptcy bearing in mind not only that an order of sequestration effects a change in the status of a debtor but also that it affects the rights of the general body of creditors. A debtor who remained unaware of the existence of a creditor's petition would be deprived of the right to contest the allegations in the petition and to contend under ss. 52(2) of the Act that he or she was able to pay his or her debtors or that for other sufficient cause a sequestration order ought not to be made. A solvent debtor would lose the opportunity to pay the petitioning creditor, give evidence of solvency and obtain a dismissal of the petition.
Until the hearing of the Deputy Commissioner of Taxation's petition against Spernovassilis before Olney J in June 1994, although many Deputy Commissioners had over many years brought a multitude of petitions before courts sitting in bankruptcy, no case was cited from the records of his office or was known to the Court or counsel in which any Deputy Commissioner had sought to contend that the questions of what amounts to service of a creditor's petition and whether substituted service of a petition should be ordered and of the form it should take fell to be determined, not in accordance with the Act and the prescription under the Bankruptcy Rules as they have been interpreted by the courts but in accordance with ss. 214(1) of the Income Tax Assessment Act 1936 or any of its predecessors.
The differences between the provision of that subsection and those of the Act and the Bankruptcy Rules as they have been interpreted by the courts are striking.
The Deputy Commissioner submitted in Re Spernovassilis and in the present case that in obeying the command of para. 52(1)(b) of the Act to require proof of service of the petition the Court should in petitions brought by the Deputy Commissioner apply the tests laid down in ss. 214(1) to the exclusion of the provisions of those of s. 47 of the Act and of Rule 15 of the Bankruptcy Rules.
Subsection 214(1) is expressed in the alternative. It applies in two types of case. The first is where the taxpayer is absent from Australia and has not, to the knowledge of the Commissioner after reasonable inquiry in that behalf, any attorney or agent in Australia on whom service of process can be effected. The second is where the taxpayer cannot after reasonable inquiry be found. In either of those cases service may be effected upon him by post in cases to which the section is applicable. The question is whether the Court should accept compliance with subsec. 214(1) as proof of service required by subsec. 52(2) of the Act. The construction for which the Deputy Commissioner contends, if accepted, would not only assist the revenue but may also enure for the benefit of any creditor substituted in his place as the petitioner. That substituted creditor could seek to rely upon the affidavits of "service" filed on behalf of the Deputy Commissioner.
Before turning to the language of ss. 214(1) it is useful to look at that of the former s. 221 of the Income Tax and Social Services Contribution Assessment Act 1936. Insofar as it referred to bankruptcy it provided as follows:
"For the better securing to the Commonwealth of the revenue required for the purposes of the Commonwealth - ........ .......
(b) notwithstanding anything contained in any other Act or State Act -
(i) a person who is a trustee within the meaning of the Bankruptcy Act 1924-1933 shall apply the estate of the bankrupt in payment of tax due under this Act (whether assessed before or after the date of the order of sequestration) in priority to all other unsecured debts other than debts of the classes specified in paragraphs
(a), (d) or (e) of sub-section (1) of section eighty-four of that Act."
Those three paragraphs related to payment of the costs of administration, the funeral and testamentary expenses of a deceased debtor and the wage or salary of an unrelated employee of the debtor. In enacting s. 221, the Parliament plainly manifested its intention to alter the mode of distribution of a bankrupt estate and to modify the provisions of the Bankruptcy Act. This intention, as was to be expected, was expressed in clear terms.
It has been submitted in the present case that ss. 214(1) of the Income Tax Assessment Act as it now stands overrides the provisions of the Act in relation to the service of a creditor's petition and the proof of service in a fashion which would entitle the Deputy Commissioner to seek and obtain an order of sequestration by proof of a form of service not available to any other creditor. It would expose debtors in respect of unpaid tax to the danger of becoming bankrupts without the Court being satisfied that they had been made aware of the petitions against them. It would deprive debtors of the protection afforded to them under the Act and the Bankruptcy Rules by the existence of the Court's discretion to refuse substituted service or to permit it and decide the form it should take.
Subsection 214(1), unlike the repealed s. 221, does not include any words such as "notwithstanding anything contained in any other Act", nor is there any reference in it to bankruptcy provisions. If construed in the manner contended for by the Deputy Commissioner, it would override the provisions of the Act and the Bankruptcy Rules in favour of the Deputy Commissioner and any creditor substituted in his place in a fashion which may lead to a denial of natural justice to a debtor who, possibly without any fault on the debtor's part, in fact remains unaware of the existence of the petition.
The construction so contended for could not, in our opinion, extend to the service of bankruptcy notices. In Re Maddox ex parte The Debtor (1978) 36 FLR 392 Lockhart J held that the issue of a bankruptcy notice is a ministerial or administrative act and not part of a judicial process. It was therefore held not to be an act within the meaning of the word "proceedings" as defined in the Family Law Act 1975. His Honour pointed out that the High Court in Bond v George A Bond and Co Ltd (1930) 44 CLR 11 had held that the issue by the Registrar in Bankruptcy of a bankruptcy notice under the Bankruptcy Act 1924 was entirely ministerial (see per Rich and Dixon JJ at p. 22). Bond's case was cited by Dixon CJ, Fullagar and Kitto JJ in James v Deputy Commissioner of Taxation (1957) 97 CLR 23 at p. 32.
In our opinion, by parity of reasoning, a bankruptcy notice, being a document of a registrar in bankruptcy and not of the Court, does not fall within the words of s. 214 of the Income Tax Assessment Act 1936, "any process in proceedings" against a taxpayer for recovery of income tax, even if the submissions of the Deputy Commissioner in the present case were otherwise to be accepted. That acceptance would produce the result that s. 214 governed the service of a creditor's petition by the Deputy Commissioner but service of a bankruptcy notice in which he was named as the judgment creditor would be governed by the Act and the Bankruptcy Rules.
Such a result, not produced by any express terms of s. 214, may be again contrasted with the language of the former s. 221, which dealt expressly with the priority of payment of the costs of administration, the funeral and testamentary expenses of a deceased debtor and the wage or salary of an unrelated employee of the debtor over payment of tax due by the debtor.
In our opinion the language of s. 214 should not be construed to include the case of a creditor's petition issued by the Deputy Commissioner. Plain words would be needed to justify the construction for which the Deputy Commissioner contends and the former s. 221 shows how easy it would have been to employ them had the Parliament intended to produce so striking a change in the law of bankruptcy.
In Re Spernovassilis Olney J heard an unopposed petition on 29 June 1994 when he made an order of sequestration, reserving the delivery of his reasons until 14 July. We have had the advantage of fuller argument from counsel for the Deputy Commissioner and also the assistance of counsel briefed on the Court's initiative to appear as amicus curiae.
His Honour was satisfied that both the bankruptcy notice and the creditor's petition in that case fell within the expression "any process in proceedings against him for recovery of income tax" and that service of each of them was proved within the meaning of s. 52 of the Act, citing the dictum in James v Deputy Commissioner of Taxation (1957) 97 CLR 23 at p. 35 where Dixon CJ, Fullagar and Kitto JJ said:
"We think that the commissioner or deputy commissioner is empowered to take proceedings in bankruptcy for the recovery of the tax as a Crown debt."
This was said in circumstances described by their Honours (on pp. 34-5) as follows:
"The substantial points taken are (1) that the Crown is the creditor not the deputy commissioner; (2) that a set-off etc. against the Crown must be enough and certainly this requirement of the notice should not be limited to one against the deputy commissioner; (3) that the deputy could not compound the debt or take security; and (4) that his satisfaction in any case would be irrelevant. All these difficulties arise out of incongruities of, on the one hand, the form supplied by the rules, the rules themselves and expressions in the text of s. 52(j) and s. 54 of the Act with, on the other hand, the situation which ss.208 and 209 of the Income Tax and Social Services Contribution Assessment Act produce, a situation which verbally the language of the form, the rules and the sections does not aptly fit. We agree, however, in the general view of provisions like ss. 208 and 209 which Street J took in Re W. Carter Smith; Ex parte Commissioner of Taxation (1908) 8 SR (NSW) 246 at pp 248-250."
In that case Street J said (at pp. 248-9):
"It was contended by Mr Armstrong, on behalf of the appellant (the taxpayer), that the Commissioners of Taxation are not creditors of a defaulting taxpayer, but that they are merely agents of the King with a precisely limited statutory authority and that that authority does not confer upon them power to present a petition in bankruptcy".
Street J concluded that the words "any land or income tax .... may be sued for and recovered by action in any Court of competent jurisdiction" were intended by the legislature "not to limit the available remedies for the recovery of the tax, but to clothe the Commissioners with power to resort to any tribunal competent to assist them in recovering amounts which might be owing" (p. 250). The taxpayer "was a solicitor who did not deny his indebtedness or his failure to comply with the requirements of the bankruptcy notice" (p. 247).
In neither of these cases was the Court dealing with a contention similar to those made in the present case.
Parsons v Bunge (1940) 64 CLR 421 was decided prior to James. No reference to it was made by the Judges who decided James' case. It seems unlikely, however, that they were unaware of it. It was not referred to either in argument or in the judgment because it was not relevant to the questions there to be decided. In Parsons v Bunge, the High Court considered, inter alia, whether leave had to be obtained pursuant to reg. 14 of the National Security (War Service Moratorium) Regulations (SR 1940 No 194), for the presentation or issue of a petition in bankruptcy. Starke J at p. 429 summarised the effect of the regulation as follows:
"A person shall not, without leave of the court, issue or cause to be issued any writ or other legal process out of any court in respect of any liability of a member of the Forces (that is, of the Commonwealth Naval, Military or Air Forces engaged on war service) under any contract or agreement (other than certain excepted contracts or agreements which are immaterial for present purposes) entered into prior to 6th December 1939 or the date on which the member commenced to be engaged on war service, whichever is the later."
Rich ACJ at p. 427, said:
"reg.14 does not require leave to be granted in the case of bankruptcy. The phrase "other legal process" in the rule, divorced from the context, would include a bankruptcy petition, which issues out of the court and cannot be withdrawn without the leave of the court (sec.59). But the phrase, when read with the context, excludes process in the nature of bankruptcy which is designed to take a debtor's property into the possession of the court for its equitable distribution pro rata amongst his creditors."
His Honour later (p. 428) indicated that it was his view that "writs and other legal process are concerned only with the ordinary proceedings in courts of law as contrasted with the proceedings of a bankruptcy court".
Starke J, at p. 429, agreeing that the regulation in question did not apply to bankruptcy proceedings, said:
"the petition in bankruptcy, though founded upon this debt was not to enforce any liability of the appellant under any contract or agreement nor was it process in respect of any such liability: it was a proceeding to sequestrate the appellant's estate because he had committed acts of bankruptcy and to effect a general cession of his estate, so that thereout his creditors might be paid. Such a proceeding cannot be described as process in respect of any liability under any contract or agreement."
Williams J at pp. 432-433 similarly drew a distinction between ordinary process and bankruptcy petitions:
"A bankruptcy petition is presented to the court, which then seals two copies. A sealed copy is served on the debtor. Although such a document would be a legal process issued out of a court it would not be apt to describe it as having been issued in respect of a liability of a soldier under a contract. It is grounded upon the existence of an act of bankruptcy which has occurred within six months of the presentation of the petition. It is therefore issued in respect of the alleged insolvency of the debtor and for the purpose of obtaining a sequestration order which will enable his estate to be administered for the benefit of his creditors generally. The debtor must be indebted to the petitioning creditor or creditors in a liquidated sum of pounds 50, and one of the purposes behind the presentation of the petition is, no doubt, to obtain payment of the debt or debts or so much thereof as the debtor's estate will be able to pay in due course of administration, but the liability of the debtor under a contract even for pounds 50 or over is not in itself a justification for the presentation of a petition. There must be an available act of bankruptcy. The liability referred to in the regulation is one which is only enforceable against the member of the Forces by the other party to the contract. But, once a bankruptcy petition has been presented, it cannot be withdrawn without the leave of the court. When a debtor commits an available act of bankruptcy any creditor or creditors to whom the debtor owes the above sum can present a petition so that, if a person has obtained judgment in an action of tort against a member of the Forces for pounds 50, he can present the petition without the leave of the court, and, upon the making of the sequestration order, a creditor claiming a debt under a contract could prove in the administration of the estate. Clause 2 of the regulation provides that the court must be satisfied that, having regard to all the circumstances of the case, it would be inequitable to the other party to the contract to give a member of the Forces the benefit of a regulation and it would not inflict hardship on the member. This provision shows that the draftsman contemplated a writ or other legal process in which the only interests to be considered were those of the parties to the contract."
The observations of their Honours in this case underline the necessity to bear in mind the differences between ordinary litigation and bankruptcy petitions. To fall within the language of s. 214 the process to be served must be "in proceedings against him for the recovery of income tax". A creditor's petition invokes the jurisdiction of a court in bankruptcy to make a sequestration order which will enable his estate to be administered in bankruptcy for the benefit of his creditors generally. The order of sequestration, if made, transforms the position of the petitioning creditor and of the unsecured creditors generally.
It is, except as provided by the Act, not competent for an unsecured creditor to enforce any remedy against the person or property of the bankrupt in respect of a provable debt or except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding (see ss. 58(3)) of the Act).
In place of those rights, a petitioning creditor obtains the right to prove in the administration of the estate of the bankrupt. The fruits of any such proof are dividends pro rata with other creditors, they are not recovery of income tax.
It is important to put James' case in context. It raised a number of questions only one of which was whether the Commissioner of Taxation or one of his Deputies was empowered to take proceedings in bankruptcy. Another question was whether a purported extension of the time for service of a bankruptcy notice by a Registrar was an exercise of the judicial power of the Commonwealth by a person who was not a judicial officer. It was held that it was so that the purported extension was invalid. It was also decided that the conditions of paragraph 52(j) of the Bankruptcy Act 1924 which was then in force could not be regarded as satisfied if the bankruptcy notice expired before it was served.
Those conclusions of the Court meant that the appeal had to be allowed. Thus the statement in the reasons of the Court (Dixon CJ, Fullagar J and Kitto J) relied upon by Olney J in Re Spernovassilis and by counsel for the Deputy Commissioner in his submission to us is obiter. Nevertheless, it is of highly persuasive authority. The dictum must, however, be read in the setting in which it appears. That is as follows (97 CLR at pp. 34-5):
"Under s. 208 of the Income Tax and Social Services Contribution Assessment Act 1936-1955 the tax is a debt due to the Crown on behalf of the Commonwealth and payable to the commissioner, that is to say the deputy commissioner: cf. s.13(b). By s.209 any tax unpaid may be sued for and recovered in any court of competent jurisdiction by the commissioner or a deputy commissioner suing in his official name. Under s.52(j) of the Bankruptcy Act the person causing the bankruptcy notice to be served must be a creditor and must have obtained a final judgment or order. A second paragraph of s.52(j) enlarges the meaning of order. A second paragraph of s.52(j) enlarges the meaning of creditor but we do not think the respondent can safely place reliance upon it to answer the appellant's objection nor does s.53 assist him. Section 54 requires simply that the 6-petition be presented by a creditor. The notice served called on the appellant to pay the judgment debt to the deputy commissioner (scil. the plaintiff who had recovered judgment) or to secure or compound for the sum to his satisfaction or that of the court or to satisfy the court that the appellant had a counter-claim, set-off or cross-demand against him (of the required amount).
The substantial points taken are (1) that the Crown is the creditor not the deputy commissioner; (2) that a set-off etc. against the Crown must be enough and certainly this requirement of the notice should not be limited to one against the deputy commissioner; (3) that the deputy could not compound the debt or take security; and (4) that his satisfaction in any case would be irrelevant. All these difficulties arise out of incongruities of, on the one hand, the form supplied by the rules, the rules themselves and expressions in the text of s.52(j) and s.54 of the Act with, on the other hand, the situation which ss.208 and 209 of the Income Tax and Social Services Contribution Assessment Act produce, a situation which verbally the language of the form, the rules and the sections does not aptly fit. We agree, however, in the general view of provisions like ss.208 and 209 which Street J took in Re W. Carter Smith; Ex parte Commissioner of Taxation (1908) 8 SR (NSW) at pp 248-50. We think that the commissioner or deputy commissioner is empowered to take proceedings in bankruptcy for the recover of the tax as a Crown debt. The officer may proceed in his own name but he sues for the Crown and as plaintiff or actor it is not in his own right but that of the Crown that he proceeds. If he has no statutory power himself to compound, nevertheless a composition in his name may no doubt be made by the Government of the day. His is but an official name, but it is the correct name in which the Crown sues. This is not the occasion to consider whether as a matter of expression the notice should be amended to conform to that view. It is enough to say that in substance we think the contentions mentioned should fail. For the reasons given earlier, however, we would allow the appeal."
We have emphasised the critical words.
The conclusion was that the Commissioner, although not the creditor, could proceed in bankruptcy both by applying for the issue of a bankruptcy notice and by presenting a petition. But the judgment makes it clear in the quoted passage that the Commissioner, although he proceeds in his own name, sues for the Crown and not in his own right. The Judges then felt it necessary to make a comment upon the power to compound and the matter of set-off. They said that, if the Commissioner had no statutory power himself to compound, nevertheless a composition in his name might be made by the Government of the day. They added that this was not an occasion to consider what, if any descriptions of set-off, might be available to the judgment debtor. It was enough for them to indicate their general view of the position. All this makes it abundantly clear that the dictum was not intended by their Honours to deal with any more than the question whether the Commissioner could proceed in bankruptcy.
We are here concerned with the method by which service may be effected. At bottom the question is one of statutory interpretation. Did Parliament, in enacting s. 214 of the Income Tax Assessment Act and its predecessors, intend to place the Commissioner of Taxation in a preferred position so far as concerns the service of process of bankruptcy proceedings. That question is to be answered by a consideration of the terms of the two statutes in question and of the purpose and policy underlying each. Fairly plainly the purpose of s. 214 of the Income Tax Assessment Act is the protection of the revenue. The purpose of the relevant provisions of the Bankruptcy Act and the Rules made thereunder is to ensure that notice of bankruptcy proceedings reaches the debtor. As the earlier analysis shows, this has important consequences, not only for the debtor, but for the general body of creditors and also for persons who may deal with a debtor who is unaware that an act of bankruptcy has been committed or that a sequestration order has been made. There are strong policy reasons why such an outcome is undesirable.
In the result we answer the question in paragraph 6 of the special case, "No". The petition should be referred to a single judge of the Court.
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