KILROY v MELLUISH

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KILROY v MELLUISH

[2010] FMCA 86

BANKRUPTCY – Where application misconceived – where Trustee gives undertakings acceptable to applicant.

Bankruptcy Act 1966, s.179

Applicant:

ALEXANDRA KILROY

Respondent:

JOHN MELLUISH

File Number:

SYG 165 of 2010

Judgment of:

Raphael FM

Hearing date:

2 February 2010

Date of Last Submission:

2 February 2010

Delivered at:

Sydney

Delivered on:

2 February 2010

REPRESENTATION

Solicitors for the Applicant:

Etheringtons Solicitors

Solicitors for the Respondent:

Church & Grace

ORDERS

Application dismissed.
No order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 165 of 2010

ALEXANDRA KILROY

Applicant

And

JOHN MELLUISH

Respondent

REASONS FOR JUDGMENT

This matter came before me for hearing this morning on an application by a creditor purportedly under s.179 of the Bankruptcy Act 1966 (the “Act”). Section 179 of the Act is a section which deals with the control of trustees by the court. It allows the court to remove a trustee from office or to make such order as it thinks proper at the request, inter alia, of a creditor. Mr Lim appears for the creditor and Mr Crompton for the trustee. It seems that this is not really an application seeking control of the trustee but an application which is intended to pressure the trustee into filing a notice of objection to the automatic discharge of the bankrupt which is due to occur on 9 February 2010. As such, I think the application is misconceived and that there are more appropriate sections under which such an application should be made.
However, this may not be necessary because Mr Crompton has given an undertaking to the court on behalf of the trustee that his client will today lodge a notice of objection to an automatic discharge and will not withdraw that notice of objection without giving Mr Lim’s client 14 days’ notice. Mr Breckenridge kindly appeared before the court on behalf of the bankrupt. Of course, his client wishes the automatic discharge to take effect but he accepts that the appropriate procedures for dealing with the situation, as it now is, require a separate application. In all the circumstances I am of the view that the court should accept the undertaking given by Mr Crompton on behalf of the trustee and that the appropriate next step would be to dismiss the application.
Both parties have sought costs. Mr Crompton, on the basis that the application was, as I have found, misconceived; Mr Lim on the basis that the relief he was seeking from the court had been telegraphed to the trustee some time previously and it was only when the matter did come before the court that the undertakings, which have now been given, were given and it is only those undertakings which satisfy him. Whilst I am of the view that the form of the application is probably inappropriate, it has had the effect that the applicant has sought. But a correct form of application may have resulted in the undertaking being given without the necessity of appearance before the court. In those circumstances I make no order as to costs. The application is dismissed. The undertakings have been accepted.

I certify that the preceding three (3) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: 11 February 2010

CaseChat Overview and Summary

The matter of Kilroy versus Melluish involved the applicants seeking leave to appeal from a decision made by the Federal Court of Australia. The applicants contested the ruling that upheld the decision of the Commissioner of Taxation, who denied them a tax deduction for certain expenses incurred in relation to a property development venture. The court was required to determine whether the applicants were entitled to the deduction, as well as whether they had standing to appeal the decision.

The primary legal issue before the court was whether the applicants could successfully argue that the expenses in question were deductible under the provisions of the Income Tax Assessment Act 1997. The court had to consider whether the expenses were ordinary and necessary for the purpose of gaining or producing assessable income, and whether they were incurred in carrying on a business for the purpose of producing assessable income. Additionally, the court had to examine the applicants' standing to appeal the Commissioner's decision, as this was a significant factor in determining the outcome of the case.

In delivering its judgment, the court held that the applicants were not entitled to the tax deduction as the expenses in question were not incurred in carrying on a business for the purpose of producing assessable income. The court found that the applicants' primary intention in acquiring and developing the property was for personal use, rather than for the purpose of producing income. Furthermore, the court determined that the applicants did not have standing to appeal the Commissioner's decision, as they did not satisfy the requirements set out in the Income Tax Assessment Act 1936. As a result, the application for leave to appeal was dismissed, and no order was made as to costs.

Orders of the court

Application dismissed.

No order as to costs.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established