Leslie, P. v Commissioner of Taxation [1995] FCA 499

IN THE FEDERAL COURT OF AUSTRALIA)No. NG 805 OF 1994 NEW SOUTH WALES DISTRICT REGISTRY) GENERAL DIVISION ) ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: PHILLIP C LESLIE Appellant AND: COMMISSIONER OF TAXATION Respondent CORAM: WILCOX, WHITLAM & NICHOLSON JJ PLACE: SYDNEY DATE: 29 MAY 1995 EXTEMPORE REASONS FOR JUDGMENT THE COURT: This appeal arises out of a decision of a judge of the Court, Tamberlin J, rejecting a point raised by a debtor, Phillip Leslie, in opposition to a bankruptcy petition filed by the Deputy Commissioner of Taxation. The debtor's notice of opposition put the point in this way: "Notwithstanding the judgment, the debtor is not indebted to the judgment creditor in the sum of the judgment, by reason of the fact that the debt due to the judgment creditor is not due by Phillip C Leslie, but due by Messrs Kelly and Cooke, acting as receivers appointed by CBFC Limited for Leslie's Omnibus Services on 12 October 1992."

The debtor carried on business, as an individual and in his own name, as proprietor of an omnibus service. In April 1989 he mortgaged his business and the land on which it was conducted to a finance company known as CBFC Limited. This was done to secure moneys loaned by the finance company to him. At the same time, by way of further security, he entered into a bill of sale and equitable mortgage over the business. In August 1989 supplementary securities were executed over the same assets to secure further advances. It appears that the debtor suffered financial difficulties. In February 1992 CBFC commissioned a report by accountants. On receipt of that report, CBFC served a notice of demand on the debtor. Following other events which it is unnecessary to detail, receivers, Messrs Kelly and Cooke, were appointed. They took the business out of the control of the debtor and subsequently sold both the business and the land. The evidence showed that the debtor also had interests in two other items of real estate: land at Meurants Lane, Parklea and a house at Junee. Messrs Kelly and Cooke were not appointed receivers of either of these properties. When the receivers were appointed, Mr Leslie was indebted to the Commissioner of Taxation in respect of group tax deducted by him from wages paid to his employees. The amount involved was apparently about $156,685, this being the amount for which the Commissioner recovered judgment against Mr Leslie in the Supreme Court of New South Wales on 30 October 1992. The liability arose under s.221P(1) of the Income Tax Assessment Act 1936, which provides: "Where an employer makes a deduction for the purposes of this Division, or purporting to be for those purposes, from the salary or wages paid to an employee and refuses or fails to deal with the amount so deducted in the manner required by this Division, or to affix tax stamps of a face value equal to the amount of the deduction as required by this Division, as the case may be, he shall be liable, and where his property has become vested in, or where the control of his property has passed to, a trustee, the trustee shall be liable, to pay that amount to the Commissioner."