Australian Credit Law Bulletin - Vol 8, No 2, February 2007
A free, plain English review of recent law and items of interest for creditors, produced by Hattaway & Associates Ltd, Credit Consultants. To subscribe send a blank email to: aus-bulletin-join@mailman.hattaways.com
Plain language disclaimer:
This bulletin is not legal advice. Do not make decisions on legal matters based on a brief commentary. Instead, get professional legal advice.
In this issue:
- Doing it tough in the eastern suburbs of Sydney
Caveats confuse many people - this case might help to explain them - Can you put a caveat on a share of a property on the grounds that you've paid for much of it?
Caveats confuse many people - this case might help to explain them - Does a 'spent' conviction stop you getting a licence to collect debts
An applicant appeals to clarify the law in NSW - Debt collection fees clause backfires on body corporate
A body corporate has mixed success when sued by an owner - How to run a successful debt collection business in India?
We've never covered an immigration case before, but this one caught our eye.
1. Doing it tough in the eastern suburbs of Sydney
Rollason and Commissioner of Taxation [2006] AATA 962 (13 November 2006)
John Cameron Rollason is a lawyer. He lives alone, having been divorced twice. In 1998 he owed tax of $620,000. He applied for relief from the Taxation Relief Board which let him off $522,000, leaving a balance of $100,000. He was to arrange to pay the balance of $100,000 in instalments, however, he has not done so.
Rollason went bankrupt in 1999 but the Law Society has not revoked his practising certificate. He did not pay compulsory contributions to his Trustee in Bankruptcy so his bankruptcy has been extended from 3 years to 8 years, ending in January 2007.
Rollason works as a contractor at a firm called Lane and Lane in Sydney, for a fixed consultancy fee of $3300 per week, including GST. Excluding GST, he makes around $150,000 per year. He rents a unit in the upmarket suburb of Edgecliff for $1000 per fortnight.
Rollason applied again for tax relief on the grounds of "serious hardship". The Administrative Appeals Tribunal was not sympathetic.
"It seems to the Tribunal to be very possible and even likely that [Rolleson] is in fact an employee of Lane & Lane but that for tax reasons he prefers to be described as an independent consultant. This has the double advantage to him that in the first place PAYE is not deducted and in the second place GST is received in addition to his salary...From the time when he became bankrupt in 1999 (on his own petition) [he] has never (except under garnishees) made any payments of tax. He said ... that he furnished BAS statements reflecting the GST but did not make any payments...
"[His] evidence that he knows nothing of bankruptcy law, tax law or the law in respect of child support is difficult to accept at face value...It is very probable that in respect of his expenses there is some considerable room for economy; he could as just one example obtain cheaper accommodation; it would seem that he can maintain his standard of living only if he does not pay tax...The fact that garnishees were issued indicates that he was also at times in default as to his obligations in respect of child support and bankruptcy contributions."
His application was rejected.
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2. Can you put a caveat on a share of a property on the grounds that you've paid for much of it?
CIUPRYK -v- THORP & ANOR [2006] WADC 165 (12 October 2006)
Paul Hudson and Douglas Thorp borrowed $240,000 and bought a house together in 1994, in East Fremantle, apparently to house Hudson's mother, who was also Thorp's grandmother. Not all the money borrowed was required to buy the house. Of the surplus, Hudson took $5000 and Thorp $44,221. They registered as proprietors of the property in equal shares, as tenants in common. This means they shared the ownership equally.
However, from 1998, Hudson apparently had to meet all the expenses - mortgage, upkeep of the property, statutory charges, and so on - on his own. In 2001, he lodged a caveat against Thorp's interest in the land. A caveat on the title tells others who may be interested in dealing with the land (buyers, lenders, etc) that the "caveator" has a registerable interest in the land which they have to take account of. It's often done to protect the priority of someone who can't immediately register their interest in the land. For example, a lender with a right to put a mortgage over a property might register a caveat as a quick, cheap alternative to formalising the mortgage. Hudson's caveat was supported by a statutory declaration claiming, in effect, that he'd paid more than his fair share.
Ciupryk is a creditor of Thorp. He obtained a judgment against Thorp and then a property (seizure and sale) order over the East Fremantle house, under the WA Civil Judgments Enforcement Act 2004. The Sheriff, in the course of executing this order, discovered that Hudson had a caveat against Thorp's interest in the house. He asked the District Court what he should do.
Unfortunately for Hudson, there was no evidence of any agreement between him and Thorp. The deputy registrar who heard the case could not see "any process or mechanism by which the charge expressed in the caveat would be generated." In other words, he didn't have any right to lodge the claim. The fact that he may have paid more than his fair share didn't, in itself, give him an interest in Thorp's share of the house let alone put him ahead of a judgment creditor with a property (seizure and sale) order.
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3. Does a 'spent' conviction stop you getting a licence to collect debts
Mahabir v Commissioner of Police, NSW Police [2006] NSWADT 358 (15 December 2006)
Mahabir was found guilty on 23 March 2004 of the offence of common assault. He received a 12 month good behaviour bond. In May 2006, after the good behaviour bond period had finished, he applied for an operator licence under the NSW Commercial Agents and Private Inquiry Agents Act 2004 (the CAPIA Act). This would allow him to carry out process serving, debt collection, repossession of goods, surveillance of persons, and investigation of persons for anyone running a business as a commercial agent or a private inquiry agent.
Some types of convictions prevent people from holding such a licence. These include convictions for firearms or drugs offences, offences under the Listening Devices Act 1984 or Telecommunications (Interception) Act 1979, or any violence, fraud, dishonesty or theft offence which is punishable by imprisonment.
Mahabir's assault conviction involved violence and was punishable by imprisonment. His application was refused by the Commissioner of Police, because of his conviction.
Mahabir appealed, arguing that it was a 'spent conviction' under the Criminal Records Act 1991 and can not be taken into account by the Commissioner. The Act limits the effect of a person's conviction for a relatively minor offence if the person completes a period of crime-free behaviour. On completion of the period, the conviction is to be regarded as 'spent. Subject to some exceptions, spent convictions are not to form part of the person's criminal history. Mahibir's conviction was clearly 'spent' in terms of the Criminal Records Act.
There have been two previous decisions on this issue. One says the Commissioner can consider spent convictions. The other says that he can't. Presumably this left the Commissioner uncertain.
In this case, the President of the NSW District Court made the decision, coming down in favour of Mahabir. The Commissioner is not look at spent convictions.
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4. Debt collection fees clause backfires on body corporate
Marcoola Beach [2007] QBCCMCmr 4 (4 January 2007)
Christine Bracken, owner of Lot 66, one of the 125 titles under the Marcoola Beach community titles scheme, sued the Body Corporate for Marcoola Beach in Queensland, demanding the refund of approximately $10,000 she had paid to them. This was made up of administrative fees paid from March 2004, debt collection fees charged by the body corporate, and interest.
The adjudicator in this case was scathing in his decision. He said, Bracken "is misguided if she thinks she can own a lot for over two years, not pursue the actions available under the legislation to an owner to address her concerns with Body Corporate expenditure, and then expect other owners to cover her share of the expenditure incurred by the Body Corporate on behalf of all owners. It is akin to a citizen saying they don't like the way a government is running the country and expecting to be excused from paying tax on that basis."
The body corporate asked that they be awarded $2,000 costs on the current hearing. This is the maximum amount allowed under the QLD Body Corporate and Community Management Act 1997 where an application is "frivolous, vexatious, misconceived or without substance". The adjudicator said that he would have seriously considered doing so but for the fact that Bracken had been successful in respect of the debt collection costs.
By-law 32 of the Marcoola Beach Community Management Statement provides for debt recovery and requires that an owner pay on demand any debt collection expenses the Body Corporate incurs in recovering a debt. While not asked to rule on it, the adjudicator said, "I am of the view that By-law 32 is not valid." He said, "it is well established in previous adjudications that it is not for a body corporate to determine what costs are reasonable. A body corporate does not have an automatic right to recover costs incurred when they hand a debt over to a debt collection agency or lawyer." Ms Bracken was therefore successful in claiming back $3,013.32 in recovery costs. The body corporate was able to keep only the $813 ordered by the Magistrates Court.
"The applicant has entirely misunderstood her rights and obligations under the body corporate legislation and has presented no legal justification for the reimbursement of her contributions and associated interest charges. The fact that she has been successful in respect to her claim for reimbursement of some legal fees is not based on any of the arguments she has presented." However, as she had partly succeeded, the application was not "frivolous, vexatious, misconceived or without substance" so he could not award anything.
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5. How to run a successful debt collection business in India?
SZJMS v Minister for Immigration & Anor [2007] FMCA 58 (16 January 2007)
n 2005 SZJMS started a debt recovery business with a prominent member of the local community in his city in India. His business associate was a supporter of the BJP (Bharitaya Janata Party), one of the two major Indian political parties. SZJMS worked in the office, and his colleague provided funding and debt collectors.
They collected debts for banks and other financial organisations. The agency earned a very good profit through commissions on the repayments of the debts, however, the methods used to enforce repayments included threats of violence and torture.
SZJMS wasn't happy with this. He resigned and went back to his family business. His business associate came to his home and demanded that he return to work in the business. SZJMS refused.
The partner became very angry and started harassing SZJMS at home and threatening him and other family members. He wanted SZJMS to repay 7 lakhs (700,000 rupees - about $20,000 Australian). In December 2005 or January 2006, this culminated in SZJMS being bashed at his house by the former partner's henchmen. They also smashed a television set and tore off his marriage necklace. SZJMS went to the man's office to complain and was again assaulted.
He went to the police but they took no action. SZJMS believed that this was because of the other man's political clout and status in the local community. After his complaint to police there were more threats of violence and more smashed furniture. He tried to relocate with his family to Mumbai, and then lived in other cities, but he claimed his associate located him and repeated threats.
SZJMS came to Australia and applied for a protection visa under Australian immigration law. He sought temporary refuge in Australia until the situation in India improved. Sadly for him, he was unsuccessful. While the Refugee Review Tribunal had sympathy for SZJMS, his case was not political persecution of the sort that would have allowed him to stay in Australia.
