Re Maher, B.J

[1985] FCA 55

IN THE FEDERAL COURT OF AUSTRALIA	)
)

GENERAL DIVISION BANKRUPTCY DISTRICT	)
)

OF THE SOUTHERN DISTRICT	OF THE	) )
STATE OF OUEENSLAND	) No. 1075 of 1984

RE : BRIAN JAMES MAHER

M PARTE: DEPUTY COMMISSIONER OF TAXATION

m:	Beaumont. J.
DATED:	26 February 1985.

-

REASONS FOR JUDGMENT

On 25 February 1985, I made interim orders in this

matter under 5.50 of the Bankruptcv Act, 1966. I then

lndlcated that I would	qive reasons for the making	of those
orders at a later date.

On 10 December 1984, the Deputy Commissloner of

Taxatlon petitioned the Court for a sequestration order

aqalnst the estate of Brian James Maher. The petitlon

alleqed and It is common qround that the debtor is lndebted

to the petitloner In the sum of $103.222.84 b?inq the

balance of the amount owing under a final judgment obtalned

by him against the debtor in the Supreme Court of Queensland

on 19 October 1984	in respect of Income tax, provisional tax
and additional tax	owed. The act of bankruptcy relied on is

that the debtor failed on or before 5 December 1984 to

comply wlth a bankruptcy notice served on 21 November 1984.

The petition was set down for hearing on 25 February 1985.

It was served on 12 December 1984.

At the commencement of the hearing of the petition,

the debtor applied for an adjournment of the petition for a

period of one week in which period, It was sald, the

petitioner's debt would be paid. The adjournment was

opposed by the petitioner who submitted that the debtor had

recently admitted his lnsolvency in the course of an

application to Carter, J. In the Supreme Court of Queensland

for an adjournment of criminal proceedings brought against

him. Reference was made to part of the transcript of that

application for adjournment in which the debtor, then

appearing in person, indicated that his only assets were a

50% interest in a brick cottage In Cairns (for whlch he paid

$25,000.00 some 5 years ago and in which his mother had a

life tenancy) and personal effects estimated to be worth

$50,000.00. The debtor there also said that he had shares

In a number of companies controlled by him but that, as he

put it, "given the present position, I don't believe it is

prudent any longer to iralue them at all". in the

3

transcrlpt. the debtor also spoke of his liabilities. He

admitted owing the petitioner $lUZ,O00.00 in respect of

Income tax assessments and sald that he owed a sum "slightly

in excess of $200,000.00" to the companies in whlch he held

shares. The thrust of the debtor's appllcation to Carter,

J. for an adjournment was that he could not afford to retain

professlonal representation. The petitioner used this

material in aid of his submission that the financial

difficulties confronting the petitioner are such as to call

for the immedlate sequestratlon of his estate.

The debtor's application for adjournment of the

petition was supported by an affidavit sworn by his

solicitor, Mr. P.J. Rogers. Mr. Royers said that he had

been advised by the debtor that funds would become available

in the Immediate future to allow satisfaction of the

petitioner's debt. Mr. Rogers did, however, make the

qualification that funds would not be available untll

approval of the Director of Public Prosecutions was given to

the payment out of certain funds. although no speclfic

evidence on the polnt was adduced before me. it appears

that, in connection with the criminal proceedings now

pending, there has been imposed by way of condition of the

4.

grant of ball to the debtor certam restrlctions on the

dlsposition of tine assets of the debtor and companles

controlled by him. It seem3 that no such disposition can be

made without the approval of the Dlrector of Public

Prosecutions. In that context. there was tendered on behalf of the debtor a telex dated 25 February 1985 from the Board

of Directors of Thoroughbred International Pty. Ltd., a

company controlled by the debtor, addressed t o the Director

of Public Prosecutions seeking his approval to certain

payments as follows:

"IN ACCORDANCE WITH YOUR CONSENT OF 9TH

JANUARY, 1985 REGARDING THE SALE OF

HAMILTON ISLAND UNIT WE REQUEST YOUR

URGENT CONSENT TO THE FOLLOWING TRANSFERS

OF FUNDS :-

1. LLOYD'S EXCLUSIVE CHARTERS (NO. 3 )

PTY. LTD. TO ASSETBUILD PTY. LTD. $60,000

2. ASSETBUILD PTY. LTD. TO THOROUGHBRED

INTERNATIONAL PTY. LTD. - $60,000

THESE TRANSFERS ARE IN REDUCTION OF

RELATIVE INTER COMPANY LOAN ACCOUNTS.

THE DIRECTORS OF THOROUGHBRED

INTERNATIONAL PTY. LTD. HAVE MET AND HAVE

CONSIDERED A BANKRUPTCY PETITION ISSUED BY

THE DEPUTY COMMISSIONER OF TAXATION

AGAINST BRIAN JAMES MAHER AND BEING NO.

1075 OF 1984 RETURNABLE TODAY.

THOROUGHBRED INTERNATIONAL PTY. LTD.

HAVING CONSIDERED ITS OWN POSITION AND

THAT OF ITS PARENT AND ITS CREDITORS HAS

RESOLVED TO ADVANCE TO BRIAN JAMES MAHER

THE SUM OF $102.222.84, SUCH COMPRISING

THE ADVANCE OF $60,000 AS REQUESTED ABOVE

AND THE BALANCE BEING FROM THE GENERAL

FUNDS OF THE COMPANY. THIS DECISION W S

TAKEN BP THE CONPANY HAVING REGX?D TO THE

5.

FACT THAT IF IT DID NOT SO MAKE THE ~ ~~~

ADVANCE, THEN ITS CHAIRMAN AND MANAGING DIRECTOR, BEING ONE OF ITS ONLY TWO

DIRECTORS. WOULD IN FACT BE DECLARED

BANKRUPT TODAY. IT WOULD RESULT IN A

BREACH OF THE SECURITY OF ITS DEBENTURE

HOLDER WITH THE LIKELY RESULT THAT THE ~ ~ ~~~~

DEBENTURE HOLDER WOULD APPOINT A RECEIVER TO THE UNDERTAKING. THE DIRECTORS CONSIDER THAT THIS IS IN NOBODYS INTEREST.

...

The approval sought has not to date been given.

But, in any event, the petitioner submits that the grant of

any such dpproval would be academic since Thoroughbred

International Pty. Ltd. is itself insolvent. In this

connection, the petitioner has tendered a balance sheet of

Thoroughbred International Pty. Limited which discloses an

excess of liabilities over assets of $4,919.467.90 as at 30

June 1984.

Mr. Roqers also annexed to his affidavit what was

said to be a statement of assets and liabilities given by

the debtor to the petitioner on	22	February 1985. That
document was m these terms:

"B.J. MAHER

At 19/1/85

Draft Discussion Paper Onlv

STATEMENT OF ASSETS AND LIABILITIES

(1) ASSETS

50% interest In Cairns

House - sub~ect to life

tenancy $25.000

6 .

Effects Personal 50,000

ASSETS TOTAL 575,000

(2) LIABILITIES

Personal Tax-Bankruptcy

Petltlon due 25/2/85 102,223

Amount owing by way of loan advance from:-

Truhold Beneflt Pty. Ltd.

Group 129.978

TOTAL LIABILITIES $232,201

(3)

Own 1/12th of shares in Maher Family

Holdings Pty. Ltd. personally. However, the Book Value and Current realisation value of the assets owned by Maher Famlly

Holdings Pty. Ltd. is reflected in the

Group Consolidation Statement	of Truhold
Benefit Pty. Ltd.”

It was submitted on behalf of the petitioner that

even if the debtor were to tender payment of the judgment

debt, the petitioner would not be bound to accept the tender

and could proceed with the petition (see McIntosh v.

Shashoua (1931) 46 C.L.R. 494). In any event, the

petitioner contended that the general tenor of the matters

put to Carter, J. by the debtor was such that this Court

could give little, If any, credence to the assertions now

made that the debt would be paid. Finally, the petitioner

submitted that even if the debt were tendered and the

accepted, the payment would be at risk of avoidance as a

preference. Thus, it was said, the immediate sequestration

of the debtor‘s estate was the only proper course open.

. . . .

7.

On behalf of the debtor it was submitted that the

Court should take into account the circumstance that the

petltlon was llsted for hearlng yesterday for the first time

and that an ad~ournment of only 7 days was sought. It was

suggested that there was every reason to suppose that the the various disposltions of assets referred to in the telex already clted.

In my view, the circumstance that the petition was

listed for hearing yesterday for the first time is a

material matter to be taken into account on the adjournment

application. True it is that the petition was filed almost

3 months ago but since only a short adjournment is sought I

am disposed to accede to the debtor's application but only

upon terms which will protect the general body of creditors.

In particular, the evidence of the general affalrs of the

debtor which is now before me indicates that not only Is the

debtor Insolvent but that at least some of the companies

controlled by him are or may be insolvent also. Thus,

although some of the liabilities of the debtor are owed to

companles controlled by him, it is at least possible that

external creditors of those companies may suffer if the

debtor is unable to discharge his liabilities to those

companies. Further, it seems that there are already

considerable restrictlons imposed over the conduct of the

affairs of the debtor and the companles controlled by hlm k y

e .

reason of the conditions of bail; that 1 s to say, the

circumstance that the Director of Publlc Prosecutlon 1 s

already exercislng a substantlal measure of control over the

affairs of the debtor and of the companies controlled by him

is, I think, a most material matter to be taken into account

on the balance of convenlence In considerlng whether an

interim order should be made under	5.50	of	the Bankruptcy
A S .

For those reasons, I made an interim order under

3.50 extending the order to the whole of the debtor's

property (see Deputv Commissioner of Taxatlon v. Clvne

(1983) 50 A.L.R. 118). In all the circumstances, I

concluded that a short adjournment should be granted but

that In the interim receivers should be granted of the

debtor's property, sublect to the petitioner giving the

usual undertaking as to damages: I adjourned the petition

until Thursday, 28 February 1985 and appointed receivers of

the debtor's property until further order.

I certify that this and the 7 preceding pages are a true copy of t h e reasons for judgment herein of The Honourable

Mr Justice Beaurnont. dd L C 4 M

Associate

Dated dG 2 er