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Re Phillips and Inspector-General in Bankruptcy

Re Phillips and Inspector-General in Bankruptcy

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Case Copied 13 November 2012 75 min read

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ADMINISTRATIVE APPEALS TRIBUNAL )

) 2010/0557
GENERAL ADMINISTRATIVE DIVISION ) 2011/4931
Re:STEVE PHILLIPS
Applicant

And:INSPECTOR-GENERAL IN BANKRUPTCY
Respondent

CORRIGENDUM TO DECISION [2012] AATA 788

The Tribunal amends its decision of 13 November 2012 as follows:

1.by deleting the ellipsis found in footnote:
(a)320 and by inserting “273”;
(b)358 and by inserting “329”; and

2.by deleting the ellipsis found in footnote 414 and by inserting “184” and by inserting after that reference “and [162]” and by adding “s.” to the word provision in that footnote.

(sgd) S A Forgie
Deputy President

CATCHWORDS – BANKRUPTCY – objection to discharge on three grounds including special grounds – whether evidence supports grounds – whether applicant had a reasonable excuse for conduct or failure constituting special ground.

BANKRUPTCY – contribution assessments – whether remuneration assessed as being received less than reasonable remuneration.

CORPORATIONS – interpretation of s 206A – offences of strict liability distinguished from offences in which strict liability applies to a particular physical element of the offence – determining fault element for other physical elements – offences distinguished from earlier formulations of offences under uniform Corporation Codes.

PRACTICE AND PROCEDURE – standard of proof – balance of probabilities – relevance of Briginshaw v Briginshaw principles in considering whether contravention of s 206A for the purposes of making an administrative decision.

PRACTICE AND PROCEDURE – whether Tribunal made decision to extend time for lodgement of application without power – whether issue can be reconsidered under appropriate head of power.

PRACTICE AND PROCEDURE – decision deemed to have been made under Bankruptcy Act – whether application for review lodged within reasonable time – whether special circumstances justifying Tribunal’s entertaining application – meaning of “entertaining” – distinguished from an application’s having been “made”.

PRACTICE AND PROCEDURE – jurisdiction – whether determined by Tribunal’s power to entertain or whether application must be “made”.

Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 170 FLR 1
Administration of the Territory of Papua New Guinea v Daera Guba (1973) 130 CLR 353
Adsett v Berlouis (1932) 37 FCR 201; 109 ALR 100
Angus Fire Armour v Collector of Customs (1988) 9 AAR 421
Attorney-General (Cth) v Breckler [1999] HCA 28; (1999) 197 CLR 83
Attorney-General (NT) v Kearney (1985) 158 CLR 500
Australian Communications and Media Authority v Clarity1 Pty Ltd [2008] FCA 1449
Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 168 FLR 253
Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd (No 2) [2005] NSWSC 267; (2005) 53 ACSR 305
Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35
Australian Securities and Investments Commission v Forge [2003] FCAFC 274; (2003) 133 FCR 487
Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 286 ALR 501; 86 ALJR 522
Australian Securities and Investments Commission v Reid [2005] FCA 1275; (2005) 55 ACSR 152
Australian Securities…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] AATA 788
Decision Date: 13 November 2012

CaseChat Overview and Summary

The case of Re Phillips and Inspector-General in Bankruptcy involved an objection to the discharge of a bankrupt and the issuance of income assessments. The primary parties were the bankrupt, Mr Phillips, and the Inspector-General in Bankruptcy, with the Trustee acting as an intermediary. The dispute encompassed three grounds for objection to the bankrupt's discharge and the assessment of contributions, including the determination of whether Mr Phillips' income was less than reasonable remuneration and whether he had a reasonable excuse for his conduct or failure constituting a special ground for objection. The Federal Circuit Court was tasked with resolving these issues.

The court was required to decide whether the evidence substantiated the grounds for objection and whether Mr Phillips had a reasonable excuse for his conduct or failure, which constituted a special ground. Additionally, it had to interpret the meaning of "reasonable remuneration" in the context of contribution assessments and determine whether the remuneration assessed was less than reasonable. The court also needed to distinguish between offences of strict liability and those in which strict liability applies to a particular physical element, and decide on the standard of proof required for administrative decisions, including whether the Briginshaw v Briginshaw principles applied. Furthermore, the court had to ascertain whether the Tribunal had the power to extend the time for lodgment of the application and whether the application for review was lodged within a reasonable time.

The court's reasoning involved a thorough analysis of the evidence presented regarding the grounds for objection to the discharge and the assessments of contributions. It concluded that the evidence did not support the grounds for objection to the discharge and that Mr Phillips did not have a reasonable excuse for his conduct. The court interpreted "reasonable remuneration" to mean remuneration that an ordinarily prudent person would consider reasonable under the circumstances. It found that the remuneration assessed was not less than reasonable. Regarding the offences, the court distinguished between offences of strict liability and those where strict liability applies to a specific physical element, and determined that the standard of proof for administrative decisions was the balance of probabilities. The court also held that the Tribunal did not have the power to extend the time for lodgment of the application but could entertain the application under certain circumstances. Finally, the court determined that the application for review was not made until the applicant paid the required fee and that special circumstances justified entertaining the application.

The court ordered that the decision to object to the bankrupt's discharge was affirmed. However, concerning the second application, the court decided that the application had not been made until the applicant paid the required fee. If the fee was paid by the specified date, the court would set aside the decisions confirming the issuance of income assessments and the filing of a notice of objection, and remit the matter for reassessment, adjusting the income figures and considering the dependency status of the applicant's children.

Orders

Orders of the court

For the reasons we have given:

in relation to the applicant’s application lodged on 8 February 2010 (first application) for review of the Inspector-General’s decision dated 21 January 2010 confirming a decision by the trustee dated 4 September 2009 to file a notice of objection to the applicant’s discharge from bankruptcy, we affirm the decision; and in relation to the applicant’s application lodged on 18 November 2011 (second application) for review of a decision by the trustee, we:

(1) determine that the application is an application for review of decisions deemed to have been made by the Inspector-General:

(a) under s 139ZE(6) of the Bankruptcy Act 1966 confirming the trustee’s decision made on 29 March 2010 to issue income assessments in respect of three Contribution Assessment Periods; and

(b) under s 149P(6) of the Bankruptcy Act 1966 confirming the trustee’s decision made on 17 April 2010 to file a notice of objection on the ground specified in s 149D(1)(f); and

(2) have formed the opinion that there are special circumstances justifying our entertaining the second application within the meaning of ss 29(4) and 29(6) of the Administrative Appeals Tribunal Act 1975;

(3) have decided that, until the applicant pays the lesser application fee of $100 payable under s 29(6) of the Administrative Appeals Tribunal Regulations 1976:

(a) the second application has not been made; and

(b) under s 25(5) of the Administrative Appeals Tribunal Act 1975, the Tribunal does not have power to review any decision of which the second application seeks review;

(4) if the applicant pays the lesser application fee in respect of the second application by close of business on 12 December 2012 or within such further time, if any as the Tribunal allows, the Tribunal will decide:

(a) in relation to the Inspector-General’s decision deemed to have been made under s 149P(6) of the Bankruptcy Act 1966 confirming the trustee’s decision made on 17 April 2010 to file a notice of objection on the ground specified in s 149D(1)(f) to:

(i) set aside that decision; and

(ii) substitute a decision:

(A) setting aside the trustee’s decision made on 17 April 2010 to file a notice of objection on the ground specified in s 149D(1)(f); and

(B) cancelling the trustee’s objection; and

(b) in relation to the Inspector-General’s decision deemed to have been made under s 139ZE(6) of the Bankruptcy Act 1966 confirming the trustee’s decision made on 29 March 2010 to issue income assessments in respect of three Contribution Assessment Periods to:

(i) set aside the decision of the Inspector-General deemed to have been made to confirm the trustee’s decision to issue contribution assessments for each of the three contribution assessment periods (CAPs); and

(ii) remit the matter to the trustee to reassess the contribution assessments on the basis that:

(A) the applicant’s total income for each of the

periods was: CAP 1 (Aug 2006-2007)

CAP 2 (Aug 2007-2008)

CAP 3 (Aug 2008-2009)

$178,285.71

$89,142.00

(B) the applicant’s total income is adjusted having regard to the following additional matter:

(i) the applicant’s total income is to be reduced by the amount of any payments he made, or was liable to make, in each CAP under the Child Support (Administration) Act 1989;

(i) the applicant’s son being a dependent in each CAP; and

(ii) an assessment’s being made of whether the applicant’s younger daughter is dependent or partially dependent on him in all or any of the CAPs and, if so, whether her income, if any, is below the threshold of $2,500.00 per annum; and

(D) the Inspector-General otherwise adopts the figures in the contribution assessments as originally made.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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