Cann v Deputy Commissioner of Taxation (Commonwealth)

Unreported 20 September 1995 FCA

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(Judgment by: Cooper J)

Cann, Re; Ex Parte Deputy Commissioner of Taxation (Commonwealth)

Court:

Judge:
Cooper J

Judgment date: 20 September 1995

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Judgment by:
Cooper J

REASONS FOR JUDGMENT

Richard Bruce Cann ("Mr Cann") and Pamela Dorothy Cann ("Mrs Cann") seek adjournment of the creditors petitions presented on 27 June 1995 and 16 June 1995 respectively. The acts of bankruptcy alleged are non compliance with bankruptcy notices issued in each case on 28 March 1995 and served on 10 April 1995.

On 13 March 1995 the Deputy Commissioner of Taxation ("the petitioning creditor") obtained judgment in the Magistrates Court in Townsville in the sum of $23,115.60 against each of Mr and Mrs Cann. Mr and Mrs Cann are directors of Oakvest Pty Ltd ("Oakvest") and HELP Australia Pty Ltd ("HELP"). The judgment in the Magistrates Court arose by way of penalties imposed upon Mr and Mrs Cann as directors of a non-remitting company (HELP Australia Pty Ltd) under Part VI divisions 2 and 3A of the Income Tax Assessment Act 1936 (Cth).

On 19 September 1995 Mr Cann held meetings of directors of both companies and resolved in respect of Oakvest and HELP that the companies were insolvent or likely to become insolvent at some future time and that an administrator be appointed to each company. The object of this resolution was to attempt to put together a proposal that would cause payment in whole or in part of all creditors of both companies.

On that day Mr and Mrs Cann received a letter from a Mr Raymond Kean of Aqua Diamond Pty Ltd indicating that Aqua Diamond Pty Ltd was in the process of preparing a letter of offer for the purchase of a tourist facility development in Cairns, Living Reef, for the amount of $5,000,000.00.

Living Reef is a project owned by Oakvest. Oakvest contracted to purchase the land upon which the development operates in about September 1993 under an instalment contract. There is currently approximately $2,400,000.00 owing to the owner of the land. Both HELP and Oakvest have invested large sums of money in loans to assist in the development of Living Reef. Mrs Cann deposes that the creditors of her husband and herself and the creditors of Oakvest and HELP amount to approximately $350,000.00 of which the amount owing to the petitioning creditor is approximately $26,500.00.

Mr and Mrs Cann seek an adjournment of the petition in order that a meeting of the creditors of the companies can be held and the administrator put a proposal whereby Living Reef would be sold to a third party or a joint venture partner would be found. Mrs Cann deposes that the Aboriginal and Torres Strait Island Commission has expressed an interest in contributing towards the Living Reef project. Mrs Cann deposes that the administrator's representative, Mr Bob May, informed her on 19 September 1995 that the meeting of creditors of the companies would be held within thirty-five days of that day.

In these circumstances I am persuaded that it is appropriate that an adjournment be granted for a limited period. I come to this view against the background of an administrator having been appointed to the companies and there being some material to suggest there is a prospect of a sale of the undertaking of the company to advantage which would see monies available to discharge the indebtedness of Mr and Mrs Cann to the petitioning creditor.

I am not satisfied that there is any prejudice to be suffered by the petitioning creditor by reason of any adjournment, notwithstanding the petitioning creditor's understandable desire to have the matter concluded as quickly as possible.

For myself, I would have thought that the prospect of payment would encourage a different view in the petitioning creditor. However, as I said during argument, that is a question of judgment depending upon one's view of the likelihood of payment at the end of the day.

In all the circumstances it seems to me that I ought to give the petitioning creditor the option of an adjournment to a date after the administrator's report to creditors (16 October 1995) or to a date after the proposed meeting of creditors, when there will be a final outcome. I say this in the context of not wishing to see the costs of the parties run up unnecessarily. Nonetheless, I think in the circumstances that it is a matter where the choice should be that of the petitioning creditor and the petitioning creditor alone.

THE COURT ORDERS THAT:

1. Creditors petition number QP406 of 1995 and creditors petition number QP332 of 1995 be adjourned to 10.15 a.m. 16 October 1995 before the judge hearing the bankruptcy list on that day.

2. Costs be reserved.

I certify that this and the preceding three (3) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.

Date: 20 September 1995

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