Deputy Commissioner of Taxation v Sproule [2012] FMCA 1188

In Deputy Commissioner of Taxation v Sproule [2012] FMCA 1188 the defendant fought a sequestration order with what appears to be a foisted contract seeking to estop the collection action, arguing that he had “…prepared a bill of exchange with a face value of $1 AUD and forwarded that to the ATO seeking acceptance as settlement for an outstanding debt of $436,472.14.”. The court held that the recipient of a bill of exchange has no obligation to accept payment in that form, and concluded:

“The nature of the material contained in the various documents tendered by Mr Sproule indicates that there has been considerable attention focused on the various sections of the Bill of Exchange Act, however, the basic concept and mechanism of this financial instrument appears to be totally misunderstood or misconceived. In the normal course a bill of exchange is prepared by a party who is advancing a line of credit to another with the expectation that the indebtedness of the party to whom it has been given will settle that amount either when some event occurs, such as supply of goods, or at some specified date which is mutually agreed between the parties and accepted by the party that is incurring the liability. The use of the bill of exchange proposed by Mr Sproule is either a complete misunderstanding of the use of the instrument or some cynical ploy to avoid the debt. In the absence of any logical explanation of how Mr Sproule intends to resolve his indebtedness to the ATO this whole approach for this form of settlement is misconceived and should be dismissed.”

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