FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v Sockhill [2001] FCA 324 DEPUTY COMMISSIONER OF TAXATION V BRUCE RICHARD SOCKHILL 7284 OF 2000 KIEFEL J BRISBANE 6 APRIL 2001 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q7284 OF 2000 IN THE MATTER OF BRUCE RICHARD SOCKHILL BETWEEN: DEPUTY COMMISSIONER OF TAXATION APPLICANT AND: BRUCE RICHARD SOCKHILL RESPONDENT JUDGE: KIEFEL J DATE OF ORDER: 6 APRIL 2001 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The estate of Mr Bruce Sockhill be sequestrated. 2. The Applicant creditor's costs to be taxed and paid from the estate of the debtor in accordance with the Bankruptcy Act 1966. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q7284 OF 2000 IN THE MATTER OF BRUCE RICHARD SOCKHILL BETWEEN: DEPUTY COMMISSIONER OF TAXATION APPLICANT AND: BRUCE RICHARD SOCKHILL RESPONDENT JUDGE: KIEFEL J DATE: 6 APRIL 2001 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Mr Sockhill's opposition to the petition filed by the Deputy Commissioner of Taxation is now limited to one ground. The grounds formerly notified, and which included constitutional objections; issues concerning the ability of the Official Trustee to delegate; and the contention that he was and is solvent, have been abandoned. Even the grounds notified in the amended notice filed on 22 March 2001 that the bankruptcy notice is invalid - have now been further restricted to one point: whether a debtor in Mr Sockhill's position is likely to have been misled as to what he was required to do in order to comply with the bankruptcy notice. In short, the question is whether a debtor would likely be confused as to whether payment of the judgment sum notified, $41,281.16, would be sufficient compliance in a circumstance where the judgment annexed to the notice refers to costs having been awarded. 2 By a judgment of the District Court of Queensland, Brisbane, of 16 March 2000, Mr Sockhill was to pay the Deputy Commissioner of Taxation the sum of $41,281.16. It was also ordered that Mr Sockhill pay the Deputy Commissioner of Taxation "costs of the action including the application to be assessed". A copy of that judgment was attached to the bankruptcy notice served on Mr Sockhill. The notice was in the form required by Form 1 to the regulations to the Bankruptcy Act 1966 (Cth) (and see s 41(2) and r 4.02). By the notice Mr Sockhill was advised that the Deputy Commissioner of Taxation claimed that he owed it "a debt of $41,281.16 as shown in the Schedule ("the debt")". It went on: "2. The creditor claims that the debt is due and payable by you. A copy of the judgment or order relied upon by the creditor is attached … 3. You are required, within 21 days after service on you of this Bankruptcy Notice: (a) to pay to the creditor the amount of the debt; or (b) to make an arrangement to the creditor's satisfaction for settlement of the debt." 3 Details were then provided as to whom and where payment of "the debt" could be made. 4 The schedule and the notes to it were in these terms: "Schedule Column 1 Column 2 1. Amount of judgment or order $41,281.16 plus 2. Legal costs if ordered to be paid and a specific amount was not included in the judgment or order (see Note 1, below) $0.00 plus 3. If claimed in this Bankruptcy Notice, interest accrued since the date of judgment or order (see Note 2, below) $0.00 4. Subtotal $41,281.16 less 5. Payments made and/or credits allowed since date of judgment or order $0.00 6. Total debt owing $41,281.16 For the Information of the Creditor - Notes to the Schedule Note 1: Legal costs (item 2 of the Schedule) If legal costs are being claimed in this Bankruptcy Notice, a certificate of taxed or assessed costs in support of the amount claimed must be attached to this Bankruptcy Notice. Note 2: Interest accrued (item 3 of the Schedule)". 5 The submission for Mr Sockhill was that, given the outstanding order for costs, a debtor might be confused or misled as to what was required to be paid. 6 It was not suggested that a creditor was not entitled to require only payment of the judgment debt as compliance with the notice. In the event of sequestration of Mr Sockhill's estate later, the Deputy Commissioner of Taxation could nevertheless claim and prove the costs to be due. 7 In my view, the notice could not have been more clear. It was plain that the figure of $41,281.16, the amount of the judgment, was "the debt" claimed and of which payment was required. The Schedule confirmed this. Item 2 of the Schedule had a nil dollar figure for costs and a note which told the debtor that if they had been claimed, a certificate of taxation would have been attached to the notice. 8 Senior Counsel for Mr Sockhill properly drew my attention to statements in Kleinwort Benson Australia Limited v James Albert Crowl (1988) 165 CLR 71, 80 which dealt with the potential for misleading a debtor by understating the amount due. Their Honours however noted that "No such uncertainty arises if it is clear that payment of the amount specified in the notice will constitute compliance with the notice". Such was the case here. 9 The ground of opposition to the petition fails. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 6 April 2001 Counsel for the Applicant: Mr R Orr QC and Mr CD Coulsen Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr S Couper QC and Ms A Julian-Armitage Solicitor for the Respondent: Rea & Sockhill Date of Hearing: 27 March 2001 Date of Judgment: 6 April 2001