Adami and Inspector-General in Bankruptcy
[2001] AATA 363
•3 May 2001
DECISION AND REASONS FOR DECISION [2001] AATA 363
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2000/248
GENERAL ADMINISTRATIVE DIVISION )
Re PETER ADAMI
Applicant
And INSPECTOR-GENERAL IN BANKRUPTCY
Respondent
DECISION
Tribunal Mr K L Beddoe (Senior Member)
Date3 May 2001
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
(Sgd) K L Beddoe
Senior Member
Decision No: 363/2001
CATCHWORDS
BANKRUPTCY – discharge from bankruptcy – objection by Official Trustee – whether misleading conduct
Bankruptcy Act 1966 s148, 149D(1), 149N, 304
Fitzgibbon v Inspector General in Bankruptcy 2000 FCA 1677
REASONS FOR DECISION
3 May 2001 Mr K L Beddoe (Senior Member)
The Official Trustee in Bankruptcy decided to file a notice of objection to the applicant's discharge from bankruptcy. The applicant sought review of that decision by the respondent Inspector-General in Bankruptcy. The decision of the Inspector-General was to confirm the notice of objection filed by the Official Trustee on 31 March 1998 relying on paragraph 149D(1)(c) of the Bankruptcy Act 1966 ("the Act").
The grounds upon which an objection to discharge may be made are set out in section 149D(1) of the Act. In particular paragraph 149D(I)(c) of the Act deals with circumstances where (when read in conjunction with section 304 of the Act):
after the date of the bankruptcy the bankrupt engaged in misleading conduct in relation to a person in respect of an amount that, …………..exceeded $3249 in 1975 and $3363 in 1997.
Section 148 of the Act sets out circumstances where a Bankrupt is to be taken as having engaged in misleading conduct in relation to a person in respect of a particular amount ("the relevant amount") where:
(a)the bankrupt, either alone or jointly with any other person, obtained credit to the extent of the relevant amount from the first mentioned person without informing that person that he or she was an undischarged Bankrupt; or
(b)………………..; or
(c)………………..; or
(d)the bankrupt, either alone or jointly with any other person, obtained goods or services from the first-mentioned person by promising to pay that person or another person the relevant amount, or amounts the total of which is equal to the relevant amount without informing the first-mentioned person that he or she was an undischarged bankrupt.
The Tribunal is not at large in this matter and is confined by the statutory criteria which applied to the respondent when making the decision under review (Fitzgibbon v Inspector-General in Bankruptcy 2000 FCA 1677.
Section 149N of the Act sets out those criteria in sub-section (1) so that the objection to discharge must be cancelled, if the Tribunal (standing in the shoes of the Inspector-General) is satisfied (in particular) that:
(a)the ground or grounds on which the objection was made are not within the terms of section 149D; or
(b)there is insufficient evidence to support the ground of objection; or
(c)the reason given for objecting on that ground (or grounds) does not justify the making of the objection.
At the hearing the applicant conducted his own case and Ms Ford appeared for the respondent. The documents lodged in the Tribunal by the respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further documents were tendered and marked as exhibits. Oral evidence was given by the applicant, a witness called by the applicant and four witnesses called by the respondent.
I make the following findings of fact. The applicant became bankrupt on 26 April 1995 on the petition of Esanda Finance Corporation Ltd (T3). At that time his occupation was described as fisherman but more particularly it seems he was a beche-de-mere fisherman. He is now a pest control operator but before the Tribunal described himself as an entrepreneur.
By a notice dated 31 March 1996 (but filed 31 March 1998) a Deputy Official Receiver for and on behalf of the Official Trustee in Bankruptcy objected to the applicant's discharge from bankruptcy pursuant to section 149B of the Act. The basis for the Deputy Official Receiver acting "for and on behalf of the Official Trustee in Bankruptcy" was not established in the "Notice of Objection to Discharge" and was not established before this Tribunal. No issue arose before the Tribunal and I am prepared to assume that the Deputy Official Receiver was authorised to act as agent of the Official Trustee.
The notice of objection relies on affidavits of Paul Sturmey of 2 April 1997 (T8) and David Lawless of (unreadable)(T 7). The notice also refers to a brief of the Australian Federal Police in relation to obtaining credit for an amount of $8,670 but that document is not in the material before this Tribunal.
Reasons for objection were stated as "the bankrupt's behaviour has breached his responsibilities under the Act". There is also a vague reference to lack of satisfaction about the applicant having made a full disclosure as to his means.
The notice of objection stated that its effect was to extend the applicant's bankruptcy to 16 May 2003.
Paul Sturmey stated in his affidavit dated 2 April 1997 that the applicant approached Hattermere Pty Ltd, trading as Higwood Anchors at 580 Gympie Road, Narangba ("Higwood"), with plans for a fish cooker. The applicant ordered eight cookers and quoted a "Tax Exemption Number" which I understand to be a number used for Sales Tax purposes. Two cookers were subsequently delivered to the applicant at Bribie Island on 15 September 1995; the month following the month of order by the applicant. Place of delivery of the other six units was to be notified. The applicant did not mention he was bankrupt and payment for the cookers has not been received by Higwood.
The affidavit of David Lawless (T7) swore that Higwood was claiming a debt being an unsatisfied judgment debt for an amount not set out in the affidavit. Quantification of the debt appears, so far as I can see, in the "Plaint and Action for a Small Debt" (T6).
That action against the applicant did not succeed in recovering the debt from the applicant, the applicant being in default and Higwood subsequently obtained another judgment for the amount of $4,480 plus costs against the applicant's mother on 26 August 1997.
The confusion as to the correct debtor is unexplained but the applicant told the Tribunal that he held power of attorney to act on behalf of his mother and that his mother owned the "FV Jansen" - the vessel apparently used by the applicant for beche-de-mere fishing until his mother leased it to another operator. There is nothing before me that satisfies me that the applicant explained to those acting for Higwood that he was acting as power of attorney or otherwise on behalf of his mother.
In the case of obtaining a loan from another company Ocean-Tech Seafood Pty Ltd ("Ocean-Tech") I am satisfied that the applicant did tell the principals that the loan was required to repair his mother's fishing boat, and that the moneys were to be paid to his mother's bank account. Whether the mother was an "alter ego" for the applicant was not investigated before me. However it is clear enough that if the applicant wished to exploit his fishing for beche-de-mere authority and quota by his own activity then he needed access to a fishing boat. As it transpired he assigned the beche-de-mere quota to Ocean-Tech.
Whatever may have been the understanding when the objection to discharge was filed in the Federal Court, the circumstances as to the two unrelated transactions may be summarised as follows.
The applicant, an experienced beche-de-mere fisherman thought there was a need for cookers, similar to prawn cookers, adapted for use for cooking beche-de-mere and for this purpose approached Higwood for the purpose of having eight beche-de-mere cookers manufactured. He discussed the matter with a friend Wal Smedley, the principal of Higwood Paul Sturmey, and Higwood's foreman Edgar Batty. The applicant produced sketch drawings of his proposed cooker and Sturmey agreed to manufacture eight cookers. Except for the sketch drawings everything seems to have been on an oral basis with the applicant and Sturmey being the respective participants in formulating the contract. Smedley said he did not participate preferring to wait in the car and Batty had discussions about the manufacture of the cooker but "took a step back" when the financial side of the transaction was discussed between the applicant and Sturmey.
Both Sturmey and Batty were adamant in their oral evidence that they did not deal with bankrupts. I am satisfied that Sturmey would not have agreed to manufacture the cookers, on a credit basis, if he had known the applicant was a bankrupt. Sturmey also made it clear in his evidence that it was not his practice to enter into a joint venture with anyone much less a person he had met for the first time. The applicant's evidence to the contrary was, in my view, fanciful and a matter of recent invention, there being nothing in the earlier documents to suggest he thought he had entered into a joint venture with Higwood.
I accept the evidence of Batty and Sturmey that they were not told that the applicant was an undischarged bankrupt. I am not satisfied that the relationship between the applicant was ever anything more than that of purchaser/vendor in a contract to manufacture and supply eight cookers as specified.
I am not satisfied that the applicant purported to or did contract with Higwood other than on his own account and in particular I am not satisfied that he contracted on behalf of his mother. The debt due to Higwood for goods supplied and services rendered was a debt due by the applicant, not his mother.
I am satisfied that the contract price for the cookers was $560 being a total price of $4,480 on the contract. All cookers were to be supplied to locations nominated by the applicant but in fact only two were supplied at Bribie Island because the applicant failed to nominate other destinations and the agreement was for payment for all eight cookers when supplied (Exhibit 1).
Higwood subsequently modified the remaining six cookers and sold them to other customers.
In relation to moneys obtained by way of a loan from Ocean-Tech the evidence satisfies me that Ocean-Tech entered into the loan agreement because it was interested in accessing supplies of beche-de-mere for processing. I am satisfied that the applicant instructed Mr and Mrs Morin to pay the instalments of loan money to his mother's bank account and it is more likely than not that the Morins were aware that the applicant was operating his mother's fishing boat the "FV Swanee". However I am satisfied on the basis of the evidence of Mr and Mrs Morin that they did not understand the refrigerated van, offered by the applicant as security, to be other than the applicant's. That may well be naive on their part but I am not satisfied that the applicant told them the van belonged to his mother.
I am also not satisfied that the applicant disclosed his bankruptcy to the Morins before he obtained the loan. It is clear enough that he did disclose the bankrupt status eventually but that was when he was prompted to do so because of an Australian Federal Police investigation.
That the applicant obtained the loan on his own account is not properly established before me. The money was represented as being required to repair the "FV Swanee" owned by the applicant's mother and the bank statements of the mother's bank account show deposits consistent with the loan moneys advanced by Ocean-Tech.
Inconsistent with that scenario is the fact of the applicant assigning his beche-de-mere quota to Ocean-Tech to satisfy repayment of the loan. Clearly on the evidence the applicant was the person holding an authority to fish beche-de-mere and he also held a quota for the exercise of his authority. His action in satisfying the debt by assigning his quota satisfies me that the applicant was personally liable for the repayment of the loan to Ocean-Tech. In the result I am also satisfied that he obtained the loan in an amount of $8,2000 (Exhibit 4) without disclosing he was bankrupt. I so find. In that regard I am satisfied that the applicant contracted with Ocean-Tech (or the Morins) for a loan amount payable by instalments as required; not a number of separate loans each being less than $3,000. Those instalments were paid to the Mother's bank account between 12 September 1997 and 24 October 1997.
ConsiderationIn relation to the matter involving Higwood, I am satisfied that the applicant contracted to purchase goods with the contract price being $4,480 and that the contract was on the applicant's own account. The applicant quoted a sales tax number on the basis that the cookers were to be sold by him to other fishermen. In entering into the contract, I am satisfied that the applicant failed to disclose to the representatives of Higwood that he was an undischarged bankrupt.
In relation to the matter involving Ocean-Tech, I am satisfied that the applicant entered into an agreement with Ocean-Tech (or the Morins) to obtain a loan of at least $6,000 and did obtain a loan of $8,200 for the purpose of repairing a fishing vessel then being operated by the applicant. I am satisfied that arrangements for the loan were negotiated between the applicant and Mr and Mrs Morin and the applicant did not disclose that he was an undischarged bankrupt. I am satisfied that the applicant first disclosed that he was an undischarged bankrupt after the loan moneys had been deposited in a bank account at the direction of the applicant.
I am satisfied that the applicant, by not disclosing, in each instance, that he was an undischarged bankrupt, obtained credit without informing the respective parties that he was an undischarged bankrupt. In each instance the amount of credit obtained exceeded the relevant amount (s 148(a)).
I am also satisfied that in relation to the Higwood transaction, the applicant obtained goods or services to a value exceeding the relevant amount without informing representatives of Higwood that he was an undischarged bankrupt.
The Notice of Objection against Discharge was based on misleading conduct, within the terms of section 148 of the Act, by the applicant. That misleading conduct was in respect of amounts exceeding $3,249 and $3,363 respectively so that the terms of section 149 D(1)(c) of the Act were and remain satisfied.
The objection to discharge has been justified by the evidence before this Tribunal both as to the sufficiency of the evidence and the reasons for the objection.
Being satisfied that section 149N of the Act does not operate to require the objection to be cancelled I will confirm the decision of the Inspector General there being no inherent jurisdiction in this Tribunal to go outside the terms of section 149N of the Act.
In coming to that conclusion I have taken into account the evidence before the Tribunal (Fitzgibbon v Inspector General in Bankruptcy 2000 FCA 1677.
The Inspector General's decision is affirmed.
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr K L Beddoe (Senior Member)
Signed: .....................................................................................
AssociateDate/s of Hearing 26 March 2001
Date of Decision 3 May 2001
For the Applicant Mr Adami (In person)
For the Respondent Ms Ford, Counsel
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