Adami and Inspector-General in Bankruptcy - [2001] AATA 363

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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] AATA 363
Decision Date: 3 May 2001

CaseChat Overview and Summary

The matter before the court involved an application by the Inspector-General in Bankruptcy to object to the discharge of Adami from bankruptcy. The Official Trustee raised objections based on Adami's alleged misleading conduct, specifically that he had obtained credit and goods or services without disclosing his status as an undischarged bankrupt. The dispute centred on whether Adami's actions constituted misleading conduct as defined under the Bankruptcy Act 1966.

The court needed to determine if Adami's actions constituted misleading conduct under section 148 of the Act. This required examining whether Adami had obtained credit or goods or services by making a misleading statement or failing to disclose that he was an undischarged bankrupt. The court also had to assess whether the amounts involved exceeded the relevant threshold under section 149D(1)(c) of the Act.

The court found that Adami had indeed engaged in misleading conduct by not disclosing his undischarged bankruptcy status when obtaining credit and goods or services. Specifically, Adami assigned his beche-de-mere quota to Ocean-Tech to satisfy a loan repayment, which demonstrated his personal liability for the debt. Furthermore, Adami contracted with Higwood for the purchase of goods without disclosing his bankruptcy, and he negotiated a loan with Ocean-Tech without revealing his status. The amounts involved in these transactions exceeded the relevant thresholds, justifying the objection to discharge under section 149D(1)(c) of the Act.

Given the findings, the court upheld the objection to Adami's discharge from bankruptcy, ruling that the evidence supported the Official Trustee's objection based on misleading conduct. The court's decision was based on the clear evidence of Adami's failure to disclose his bankruptcy status in obtaining credit and goods or services, which met the statutory criteria for objection.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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.Consideration In 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.