Case: Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Outcome: discussed
I was next referred by the Commissioner to the assistance to be gained from government statements of policy, as outlined by Brennan J (then a member of the Tribunal) in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640, and in particular the following: 'There are powerful considerations in favour of a Minister adopting a guiding policy. It can serve to focus attention on the purpose which the exercise of the discretion is calculated to achieve, and thereby to assist the Minister and others to see more clearly, in each case, the desirability of exercising the power in one way or another. Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.' I draw attention in particular to his Honour's reference to 'the guidance given by an adopted policy' . Of course the operations of that policy in relation to contemporary values may be a matter of difficulty when it comes to making a judgment in particular cases. 35 Upon the footing of what was described as 'those guiding principles and rulings', the Commissioner contended that the Tribunal 'misapplied or misinterpreted the statute in relation to the facts proved', since the present was not a case, so it was emphasised, where Mr Milne's 'financial difficulty was such that either he or his dependants would be '... in significant need warranting action... to relieve their condition' (those words cited appearing at [24] of the Tribunal's decision). The difficulty with that observation of generality lies in its application, and in particular in relation to Mr Milne's family exigencies as well as those of his own personally, involving as they do the need for reasonable accommodation for himself and apparently for two or at least the youngest of his three children, and completion of the education of that youngest child. 36 The Commissioner contended that in dealing with the issue of serious hardship , the Tribunal fell into error, in that the Tribunal: (i) failed to consider whether Mr Milne had sufficient equity in his assets to discharge all of his liabilities including the debt due to the Commissioner, without bankruptcy, and relied instead upon the statement of assets and liabilities provided by Mr Milne in September 2004, which however referred to his assets but not his liabilities; that material was said by the Commissioner to have demonstrated an excess of assets over liabilities of $409,800 and although Mr Milne subsequently provided an updated statement of assets and liabilities showing his financial position as of November 2004 (see in that regard what I have already reproduced in [8] above), nevertheless on the basis of that statement of assets and liabilities, there was available 'equity' in the sum of $199,200 to discharge a tax debt of $149,876.68; (ii) failed to take into account, adequately or at all, whether Mr Milne or his dependants would be deprived in reality of necessities according to normal community standards; in that regard it was said by the Commissioner that Mr Milne was in the position, at least for the foreseeable future, to earn significant income to provide for the necessities of life for one, or perhaps two, dependent children as well as himself; both the financial statement provided by Mr Milne to the Tribunal on 30 September 2004 and his updated financial information were further said to have demonstrated that just under one half of his estimated fortnightly expenses would be expended in mortgage payments; if the mortgage was to be discharged upon the sale of the properties at Eastwood and Brindabella, then on Mr Milne's own figures, there would be a fortnightly income surplus (even assuming the payment of a reasonable amount for rent on account of alternative accommodation, whatever that might be); and (iii) concentrated exclusively on what income Mr Milne required to survive on the assumption that he retained all of his assets, yet (according to the Commissioner) there were a number of errors inherent in that approach, in that: (a) if Mr Milne's level of expenditure remained approximately the same, and whether or not he was required to pay the amount due to the Commissioner, then absent the sale of his assets, he would face bankruptcy, yet relief of his income tax liability would not alleviate that plight, but would give preference to other creditors; (b) no or no proper regard was paid by the Tribunal to the extent of Mr Milne's assets generally; and (c) on Mr Milne's own case, some time within the next three years or so, he would cease to work; in such an event, he would have no income, and in order to discharge other creditors he would be required to sell his assets in any event. 40 The implications of all that were said by the Commissioner to be as follows: (i) Division 4B of Part VI of the Bankruptcy Act 1966 (Cth) came into force on 1 July 1992 by virtue of the Bankruptcy Amendment Act 1991 (Cth), and the objects of Division 4B of Part VI appear in s 139J as follows: '(a) to require a bankrupt who derives income during the bankruptcy to pay contributions towards the bankrupt's estate; and (b) to enable the recovery of certain money and property for the benefit of the bankrupt's estate;' (ii) in general terms, that Division provides for the trustee to assess the amount of a bankrupt's income in each successive year of the bankruptcy, and may establish a liability on the part of the bankrupt, pursuant to an income tax assessment, to make a contribution out of an excess of income assessed over a specified threshold; (iii) the threshold amount is defined in terms of the maximum basic rate of pension payable under the Social Security Act 1991 (Cth); (iv) the liability of a bankrupt to pay a contribution pursuant to his or her trustee's assessment is imposed by s 139P(1) of the Bankruptcy Act , which provides: 'Subject to s 139Q , if the income that a bankrupt is likely to derive during a contribution assessment period as assessed by the trustee under an original assessment exceeds the actual income threshold amount applicable in relation to the bankrupt when that assessment is made, the bankrupt is liable to pay to the trustee a contribution in respect of that period.' (v) section 139P(2) of the Bankruptcy Act provides for voluntary contributions where the assessed income falls below the threshold amount; s 139Q thereof imposes a liability to pay a contribution in respect of a contribution assessment period, where the trustee has made a subsequent assessment which exceeds the actual income threshold amount; (vi) the contribution payable by a bankrupt pursuant to that assessment process is defined in s 139S of the Bankruptcy Act as follows: 'The contribution that a bankrupt is liable to pay in respect of a contribution assessment period is the amount worked out in accordance with the formula: Assessed income-Actual income threshold amount 2 where: "Assessed income" means the amount assessed by the trustee to be the income that the bankrupt is likely to derive, or derived, during the contribution assessment period; "Actual income threshold amount" means the actual income threshold amount assessed by the trustee to be applicable in relation to the bankrupt when the assessment is made.'; (vii) the foregoing concept of 'actual income threshold amount' is further defined in s 139K on a sliding scale, increased according to the number of dependents that the bankrupt has and the extent of their dependency; 'the base income threshold amount' is defined in s 139K for a particular time as the amount that 'at that time, is specified in column 3, item 2, Table B, point 1064-B1, Pension Rate Calculator A, in the Social Security Act 1991 , multiplied by 3.5' ; (viii) in the present case, because Mr Milne has more than two dependents, the base income threshold amount is increased by 27% (s 139K(c)); and (ix) once Mr Milne became bankrupt, he would be liable to contribute 50% of the difference between his actual income (as assessed by the trustee) and the base income threshold amount so increased by 27%; according to the Commissioner's calculations, upon the basis of an assessable annual income of $90,000.00 and two dependent children, the formula in s 139K of the Bankruptcy Act required an annual contribution of $29,958.56 or a fortnightly contribution of $1,152.25 (being less than half of Mr Milne's fortnightly mortgage payments). 41 Significantly therefore, so the Commissioner submitted, Division 4B of the Bankruptcy Act contains within it a mechanism to determine a higher income threshold in cases of hardship; pursuant to s 139T(1) of the Bankruptcy Act , where the trustee has made an assessment of a contribution that a bankrupt is liable to pay and that bankrupt considers that if required to make any such contribution, he or she would suffer hardship (emphasised by the Commissioner incidentally to be 'not serious hardship ') for any reason or reasons set out in subs 139T(2), then the bankrupt may apply to the trustee for the making of a determination. The reasons which might be operative in the favour of Mr Milne, if made bankrupt, were said to be found within sub-paragraphs (a)-(e) of s 139T(2) , which read as follows: '(a) the bankrupt or the dependent of a bankrupt suffers from an illness or disability that requires on-going medical attention and the supply of medicines, and the bankrupt is required to meet a substantial proportion of the costs of that medical attention or those medicines from his or her income. (b) the bankrupt is required to make payments from his or her income to meet the cost of child day care to enable the bankrupt to continue in employment or other work; (c) the bankrupt is living in rented accommodation that is not provided by, or by an authority of, the Commonwealth, a State or a Territory, or by a local government authority, and the bankrupt is required to pay the cost of that accommodation wholly or mainly from his or her income: (d) the bankrupt incurs substantial expense in travelling to and from the bankrupt's place of employment or other work, whether by public transport or otherwise; (e) the spouse of the bankrupt, or another person residing with the bankrupt, who ordinarily contributes to the cost of maintaining the bankrupt's household has become unable to contribute to those costs because of unemployment, illness or injury.' 42 In summary, it was contended by the Commissioner that the Tribunal failed to consider all of the so-called 'true effects' which bankruptcy would have had on Mr Milne.