Deputy Commissioner of Taxation v McKean [2001] FCA 429

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v McKean [2001] FCA 429 BANKRUPTCY - Part X arrangement - whether omitted a "material particular" from statement of affairs - reasonableness - whether terminating the composition would be in the interests of creditors

Statutes Bankruptcy Act 1966 (Cth) Part X, ss 222(4)(b), 222(5), 239, 241, 242

Cases Augustyn v Putnin (1988) 83 ALR 514 Cited Beard v Prestige Baking Industries Pty Ltd (1981) 36 ALR 307 Appl Calegeros v Attorney-General (Cth) (1953) 88 CLR 41 Cited Khera v National Australian Bank Ltd (1996) 71 FCR 133 Appl Lasovase Pty Ltd v Byrne [1999] FCA 223 Cited Lensworth Finance Ltd v Segal and Ward (1975) 9 ALR 154 Appl DEPUTY COMMISSIONER OF TAXATION v GLENN R McKEAN Q 7264 OF 1999 KIEFEL J 17 APRIL 2001 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q7264 OF 1999

IN THE MATTER OF GLENN R MCKEAN

BETWEEN: DEPUTY COMMISSIONER OF TAXATION

APPLICANT

AND: GLENN R MCKEAN

RESPONDENT

JUDGE: KIEFEL J

DATE OF ORDER: 17 APRIL 2001

WHERE MADE: BRISBANE

THE COURT DECLARES THAT: 1. The deed of composition of 23 August 1999 is void. THE COURT ORDERS THAT: 2. The estate of Glenn R McKean be sequestrated. 3. The applicant's costs of the application be taxed and paid out of the said estate. 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 Q7264 OF 1999

IN THE MATTER OF GLENN R MCKEAN

BETWEEN: DEPUTY COMMISSIONER OF TAXATION

APPLICANT

AND: GLENN R MCKEAN

RESPONDENT

JUDGE: KIEFEL J

DATE: 17 APRIL 2001

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 On 16 June 1999 the Deputy Commissioner of Taxation ('the applicant') filed a petition seeking the sequestration of Mr McKean's estate. It was adjourned to permit a proposal to be put under Part X Bankruptcy Act 1966 (Cth). On 23 August 1999 a composition was accepted by a meeting of creditors pursuant to which Mr McKean was to pay $20,000 in two instalments. The second instalment has not yet been paid. It was due six months after acceptance of the proposal. Mr McKean believes he is now in a position to make the payment from borrowed funds. 2 The applicant was not present at the meeting. This is not however relied upon as a ground. It is said to be owed some $122,580.75 by way of unpaid tax. The amounts then owing by Mr McKean to secured creditors totalled $318,879.00 and to unsecured creditors $144,680.00, which sum included the amount then due to the applicant. 3 The applicant applies to have the composition declared void, set aside or terminated on three grounds: (1) That Mr McKean omitted relevant information in relation to his financial affairs (s 222(4)(b)); (2) That he has failed to make a payment under the composition (s 241); (3) That the amount offered to creditors was unreasonable (s 239); and seeks a sequestration order. The third of the grounds requires an order extending time, since it was brought later than twenty-one days from the date of the special resolution accepting the composition.