Deputy Commissioner of Taxation v White [2009] FMCA 239 (17 March 2009)

Last Updated: 19 June 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DEPUTY COMMISSIONER OF TAXATION v WHITE

[2009] FMCA 239

BANKRUPTCY – Creditor’s petition – no appearance by debtor – sequestration order.

Bankruptcy Act 1966 (Cth), s.52

McIntosh v Shashoua [1931] HCA 56; (1931) 46 CLR 494 Re Bowen; Ex parte Debtor [1924] B & CR 32

Applicant:

DEPUTY COMMISSIONER OF TAXATION

Respondent:

RAYMOND WALTER WHITE

File Number:

SYG 2832 of 2008

Judgment of:

Barnes FM

Hearing date:

17 March 2009

Delivered at:

Sydney

Delivered on:

17 March 2009

REPRESENTATION

Solicitors for the Applicant:

Australian Government Solicitor

Respondent:

No appearance

ORDERS

(1) That a sequestration order be made against the estate of Raymond Walter White.
(2) That the applicant creditor's costs fixed in the amount of $2,493.60 be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.
(3) That a copy of this order is to be provided to the Official Receiver in Sydney within two (2) days.

The Court notes that the date of the act of bankruptcy is 29 September 2008.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 2832 of 2008

DEPUTY COMMISSIONER OF TAXATION

Applicant

And

RAYMOND WALTER WHITE

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

1. The applicant filed and presented a creditor’s petition on 31 October 2008 seeking that a sequestration order be made against the estate of Raymond Walter White. The act of bankruptcy is said to consist of a failure by Mr White to comply with the requirements of a bankruptcy notice that was issued on 25 August 2008 on or before 29 September 2008. The creditor's petition states that at the time of the petition the debtor owed the creditor the sum of $487,121.61, consisting of the amount due under a judgment obtained in the District of New South Wales on 4 May 2007 and interest.
2. The matter was listed for hearing today before a Registrar of this Court. I am satisfied on the basis of the material before me, in particular the affidavit of service of Mr Boateng sworn on 16 March 2009 and filed today, that Mr White was notified of the orders that were made by the Court on 4 March 2009, the last occasion the matter was before the Court. Mr White appeared on that day by way of telephone link. The solicitors for the creditor wrote to Mr White on 5 March 2009, reminding him of the orders that were made, including that the petition was adjourned to today at 9.45 am.
3. When the matter came before the Registrar today there was no appearance by Mr White. I am told that unsuccessful attempts were made to contact him on both landline and mobile phone number. The creditor seeks to proceed with the petition.
4. When the matter came before me my associate rang both the landline and mobile phone numbers provided by Mr White to give him an opportunity to appear by telephone link. These attempts to contact Mr White were unsuccessful. In these circumstances, I consider that it is appropriate to proceed in his absence.
5. I am satisfied on the basis of the affidavits filed by the creditor with proof of the matters required under s.52(1) of the Bankruptcy Act 1966 (Cth), in particular with proof of the matters stated in the petition as verified, with service of the petition and (on the basis of the most recent affidavit of debt) with proof of the fact that the debt on which the petitioning creditor relies is still owing and exceeds the sum of $2,000. The bankruptcy notice was issued on 25 August 2008 and served on 8 September 2008. The date of the act of bankruptcy is 29 September 2008. I am satisfied that the debtor was served with the creditor's petition on 13 November 2008.
6. While I am satisfied with proof of the matters required under s.52(1) of the Bankruptcy Act, it is nonetheless open to the Court to adjourn a hearing of the creditor's petition. The debtor is not present today, but he sent to the Court and to the solicitors for the creditor, a bundle of documents including two headed “letter rogatory”, another which is described as an affidavit in support (although not in proper form), a “notice of dishonour and opportunity to cure”, a certificate of mailing and a document described as a promissory note. I have considered the documents received from the debtor, both as an application for a stay and as an application for an adjournment as requested in those documents. In relation to the latter, I have had regard to the interests of the parties and the interests of the administration of justice on the material before me. The debtor appears to seek a stay of proceedings or adjournment on the basis that he has provided to the creditor's solicitors a document entitled “promissory note” which is said to promise to pay $600,000. The solicitor for the creditor received a copy of this document but, as is apparent from the affidavit of service sworn on 16 March 2009, replied to Mr White by letter dated 5 March 2009 advising that the Deputy Commissioner of Taxation was not prepared to accept the document entitled “promissory note” in full satisfaction of his tax liability.
7. The debtor also proposed that the Deputy Commissioner of Taxation utilise his “private exemption/asset funds” to permanently settle his liability to the Deputy Commissioner of Taxation. The legal representative for the Deputy Commissioner of Taxation was not able to assist me as to precisely what this was a reference to and it is not clear from the documents that are before me. The letter of 5 March 2009 responded to Mr White's suggestion. It indicated that the request was considered by the Deputy Commissioner of Taxation and that the Deputy Commissioner of Taxation was not prepared to accept or endorse that proposal.
8. The material before the Court does not provide a basis on which the proceedings should be stayed or adjourned. A creditor is not obliged to accept a tender of payment (see McIntosh v Shashoua [1931] HCA 56; (1931) 46 CLR 494) let alone an offer of payment in the form suggested by the debtor, but may seek to pursue the creditor's petition. The fact of the proposals made by the debtor to the Deputy Commissioner of Taxation is not such as to satisfy me either that I should exercise my discretion not to make a sequestration order notwithstanding that the requirements of s.52(1) are met, or that the circumstances are, for this or for any other reason, within s.52(2)(b) such that for other sufficient cause, a sequestration order ought not to be made. Nor, more generally, are they or the other material before the Court such as to satisfy me that there should be an adjournment or a stay. I note the absence of information as to the financial position of the debtor (see Re Bowen; Ex parte Debtor [1924] B & CR 32).
9. Under s.52(2) if the Court is satisfied that the debtor is able to pay his or her debts, it may dismiss the petition. There is no evidence of solvency before the Court such as to satisfy me that the debtor is able to pay his debts in the requisite sense. The documents that he forwarded to the Court, including the promissory note, are not such as to satisfy me in that regard.
10. In all the circumstances, I am satisfied that the respondent debtor committed the act of bankruptcy alleged in the petition as amended. I am satisfied of the matters required in s.52(1) and the debtor has not satisfied me of the matters required under s.52(2). A sequestration order should be made as sought by the creditor. No stay should be ordered. This is not a case in which it has been established that it is appropriate to stay proceedings under a sequestration order under s.52(3).
11. The creditor also seeks costs fixed in the sum of $2,493.60, and has provided a statement of costs and disbursements indicating how that amount (which is less than the scale) has been calculated. I consider that it is appropriate to make the orders sought.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 27 March 2009