Deputy Commissioner of Taxation v Robert Nitijudo Wachjo [2005] FCA 561 | Case summary

Proof of debt 7 The petition states that the respondent is indebted to the Commissioner in the total sum of $2,122,997.20. 8 The proof of debt is contained in the two affidavits sworn by Mr Bradley Pearson Liddle, being a tax officer of the Australian Tax Office, on the 7 and 15 December 2004. I was informed by counsel for the Commissioner during the hearing of the application that the subsequent affidavit was necessitated by the Commissioner becoming aware of further amounts owed by the respondent. Three notices of assessment were issued to the respondent pursuant to s 222AOE of the Income Tax Assessment Act 1936 (Cth) ('the Tax Act') in 2002. Those notices imposed penalties incurred by the respondent in his capacity as director of Universal for failure to comply with either ss 222AOC or 222AOD of the Tax Act. Those sections relate to the requirement of directors of a company to cause the company to comply with its obligations in relation to income tax deductions pursuant to s 222AOB of the Tax Act. The total amount of those penalties was $167,084.97. The respondent also owes the Commissioner the sum of $1,199,089.89 in respect of unpaid income tax in the years ended 30 June 2001, 30 June 2002 and 30 June 2003. This amount includes additional charges for late payment. The respondent is also charged with penalties payable in respect of his failure to lodge income tax returns in the years ended 30 June 2001 and 30 June 2002. Those amount to $1,121.12, which includes the general interest charge accrued there on up to an including 9 December 2004. Finally the respondent is liable to the Commissioner for $755,691.22 being administrative penalties, and the general interest charge thereon for tax shortfall amounts in respect of the financial years ended 30 June 2001, 30 June 2002 and 30 June 2003. Mr Liddle's affidavit sworn on 15 December 2004, which, together with his earlier affidavit sworn on 7 December 2004, was filed after the presentation of the petition on 20 December 2004, contains the calculations of each of these amounts. That affidavit further attests that as at 9 December 2004, the respondent still owed the Commissioner the sum of $2,122,997.20. 9 The amount now owed by the respondent to the Commissioner is $2,210,980.58, owing to additional interest and charges that have accrued, due since 9 December 2004. This is detailed in the affidavit of debt sworn by Ms Julieanne Waters of the Australian Tax Office on 18 April 2005. Ms Waters attested to the fact that no payments had been made in respect of that liability since the swearing of Mr Liddle's 15 December 2004 affidavit. Ms Waters' affidavit repeated the calculations contained in the earlier affidavit that I have essayed; updating those amounts for which the respondent is now liable. I am satisfied that the debts upon which the Commissioner relies are still owed by the respondent.

Act of bankruptcy 12 The final issue which I resolve relates to the existence of the act of bankruptcy alleged in paragraph 4 of the petition. That paragraph expressly evokes the terms of s 40(1)(c)(i) and (iii) of the Bankruptcy Act, which are as follows: 's 40(1) A debtor commits an act of bankruptcy in each of the following cases: … (c) if, with intent to defeat or delay his or her creditors: (i) he or she departs or remains out of Australia; (ii) … … (iii) he or she otherwise absents himself or herself … 13 The respondent left Australia on 9 December 2002. In evidence is the respondent's departure card which indicates that he travelled on an Australian passport to Singapore en route to the United Kingdom. Records obtained by the Commissioner from the Department of Immigration and Multicultural and Indigenous Affairs show that the respondent has not returned to Australia, in spite of recording on his departure card that the estimated time that he would be overseas was to be 10 days. 14 Universal entered voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth) on 16 December 2002, being precisely one week after the respondent left Australia. The liquidator of that company, who was appointed on 19 December 2002, is Mr John Sheahan. The ASIC company extract annexed to Mr Liddle's affidavit sworn on 7 December 2004 reveals that the respondent's brother Mr Cliff Dipo Wachjo was the secretary of Universal as at the time of liquidation. Mr Liddle attests that Mr Sheahan was unable to locate either the respondent or his brother. In the same affidavit it is affirmed that a son of the respondent, Rafael Wachjo, left Australia on 28 June 2004 and has not returned, in spite of informing the Department of Immigration and Multicultural and Indigenous Affairs that his absence from the country would be no more than 20 days. Finally, a daughter of the respondent, Reinne Butcher, left Australia on 18 March 2004 and has not returned. 15 The affidavit of Mr Murray sworn on 7 March 2005 refers to telephone records of all international calls made from the respondent's residence at 12 Burlington Road, Jilliby NSW, commencing from 1 March 2004. These records were obtained under the Telecommunications Act 1997 (Cth). The Telstra report records that the majority of calls were made to telephone numbers operated in Indonesia. I observe that the respondent was born in Indonesia according to the ASIC records annexed to the first affidavit of Mr Liddle. Further investigation, details of which are contained in Mr Murray's affidavit, reveal that the respondent's daughter was the authorised representative of the company who leased one of the telephone line connections, the international calls from which formed the basis of the Telstra report. As counsel for the Commissioner observed during the hearing, inferences may be drawn from these facts, which point to the likelihood of the respondent having, at the very least, links with Indonesia. 16 Mr Michael Murray's affidavit sworn on 7 March 2005 also details attempts that had been made to contact the respondent through two of his former solicitors, being Ms Elizabeth Moran and Messrs Aubrey Brown Partners. Both solicitors indicated however that they would not be in a position to deliver documents to the respondent. I would observe that in spite of this, Mr Murray's correspondence with solicitors for the Commissioner would indicate that she received the petition even though it was never posted to her. 17 A further affidavit was filed by the Commissioner on 19 April 2005, being the affidavit sworn by Mr Murray on the same day. That affidavit brought into evidence further correspondence between various Australian banks and the Commissioner. That material related to inquiries made about various bank accounts conducted in the name of the respondent. Those inquiries were made subsequently to the date of departure of the respondent from Australia. In response to a notice served upon Westpac Banking Corporation under the Taxation Administration Act 1953 (Cth), the Commissioner was informed by letter dated 2 July 2003 that accounts of the respondent had been closed respectively on 6 June 2003, 18 June 2003 and 30 June 2003. In response to the notice sent to the National Australia Bank, the Commissioner was informed that the respondent did not hold an account with that bank. The response from St George Bank was that there were no funds in the relevant account with which to meet the notice. 18 I further observe that there was no appearance by the respondent when the matter was called before the Registrar on 19 April 2005 and this petition initially came on for hearing earlier in the day on 19 April 2005. Similarly, the respondent made no appearance when the hearing eventually took place before me later that same day. 19 It is in all of those circumstances that I am asked to find that the respondent committed an act of bankruptcy on 20 June 2004 by remaining out of Australia, or otherwise absenting himself, with the intent of defeating or delaying his creditors, being in this case of course the Commissioner. Section 40(1)(c) was recently discussed in Puels v Exelerate Funding Pty Limited [2005] FCAFC 38 (Weinberg, Jacobson and Lander JJ), where the debtor was held to have absented himself with intent to defraud his creditors, within the terms of s 40(1)(c)(iii) of the Bankruptcy Act, by excusing himself from a creditors meeting and refusing to be contacted subsequently. Lander J limited his reasons to s 40(1)(c)(iii) owing to the inapplicability of the other bases contained within that sub-section. Jacobson J agreed with Lander J, as did Weinberg J who added further observations of his own in relation to s 40(1)(c)(iii). Counsel for the Commissioner also relied upon my decision in Edge Technology Pty Ltd (in liq) (receiver appointed) v Jen-Tse Wang [2000] FCA 1586, which was a case where the debtor had departed from Australia. 20 In Puels, Lander J rejected the appellant's submission based upon the following passage from my reasons for judgment in Edge Technology appearing at [7]: 'A party is likely to have absented himself or herself where, with intent to defeat or delay his or her creditors, he or she has so acted as to render it impossible for his or her creditors to ascertain his or her whereabouts: In re Alice Alderson; Ex parte Jackson [1895] 1 QB 183.' Lander J did not accept that this passage enunciated the relevant test as to whether a person had absented himself, within the meaning of the Bankruptcy Act, such as to make it 'practically impossible' for his creditors to ascertain his whereabouts. Lander J expressed the view (with which Weinberg and Jacobson JJ agreed) that what I had in mind, by that statement in Edge Technology, was not to lay down a universal test for determining whether a person had absented him or herself, but rather to demonstrate an instance where such would be found to have been the case. 21 Section 40(1)(c) of the Bankruptcy Act requires a physical act that is accompanied by the necessary intent in order to satisfy the notion of defeating or delaying the debtor's creditors. A useful general statement on the subject is contained in the judgment of Clyne J sitting as judge in the Federal Court of Bankruptcy in Re Andrews; Ex parte Manning (1966) 8 FLR 56 at 58: 'Intent to defeat or delay is a question of fact and must be alleged by a petitioning creditor and proved. It is seldom that the intent of a debtor can be proved by a debtor's own statements, and it is usually shown by inference from the circumstances in which the debtor departed from his dwelling house or place of business. The evidence necessary to prove intent must differ according to the circumstances of each particular case. The conduct of a debtor in various forms may give rise to a presumption of intent obliging the debtor to rebut the presumption, but in the end this intent must be established.' Furthermore, as I pointed out in Edge Technology at [5]: 'In considering the conduct of the debtor against a background of all the facts and circumstances, it is clear that the Court must infer that a person intends the necessary consequences of his or her acts: Ex parte Goater, Re Finney (1874) 30 LT 620 at 621 per Mellish LJ.' In Barton v Deputy Federal Commissioner of Taxation (1974) 131 CLR 370 at 375 Stephen J referred to various authorities in holding that the 'requisite intent to which s 40(1)(c) refers need not be a debtor's sole intent in leaving or remaining out of the country'. 22 As counsel for the Commissioner observed in his comprehensive written submissions, there is no direct evidence of the intention relevantly of the respondent as at his time of departure from Australia. Counsel pointed to the respondent's absence from return to Australia, the departure and absence of return of two of his children, one of whom was making numerous international telephone calls to the respondent in the lead up to her departure, and the inability of the Commissioner to contact him directly or through his former legal representatives, together with the apparent withdrawal or transfer of the contents of his Australian bank accounts, as evidence of the respondent's intent to defeat or delay his creditors by remaining out of Australia. Counsel also contended that the proximity of his departure to the winding up of Universal, in a context of his personal liability that had arisen in respect of the unremitted tax, was indicative of a departure from Australia with the requisite intent. 23 I would further adopt the Commissioner's submission that notwithstanding the fact that the departure occurred more than six months prior to the presentation of the petition, the terms of s 40(1)(c)(i) of the Bankruptcy Act are still satisfied, because of the words thereof 'or remains out of Australia'. 24 In the circumstances I do not consider it necessary to address the Commissioner's submissions directed to fulfilment of s 40(1)(c)(iii) of the Bankruptcy Act. 25 Finally, I should refer to the affidavit of Silvana Rokov, sworn 18 April 2005, she being an employee of the Australian Government Solicitor, to which is annexed the results of a search undertaken by her of the records of the Insolvency and Trustee Service, which search revealed that there was no record of the respondent having been already made bankrupt, nor of any other bankruptcy petition pending against the respondent debtor Mr Wachjo.

Deputy Commissioner of Taxation v Robert Nitijudo Wachjo

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