Application Of Official Trustee in Bankruptcy in the Matter Of the Bankrupt Estate Of David Austin Kelly

[2015] FCCA 1106

FEDERAL CIRCUIT COURT OF AUSTRALIA

APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF THE BANKRUPT ESTATE OF DAVID AUSTIN KELLY [2015] FCCA 1106

Catchwords:
PRACTICE AND PROCEDURE – Judgment was reserved on whether to grant an adjournment to person opposing an application for an order under s.146 of the Bankruptcy Act 1966 (Cth) (Opponent) and if no adjournment were to be granted on whether the Opponent had an arguable case she had an interest in the bankrupt estate – whether appropriate to deliver judgment given the relief sought in an application in a case filed by the Opponent included an order for alternative dispute resolution – not appropriate to deliver judgment – the Opponent’s application in a case and the application under s.146 both to be set down for hearing.

Legislation:

Bankruptcy Act 1966 (Cth), s.146

Applicant: APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF THE BANKRUPT ESTATE OF DAVID AUSTIN KELLY

File Number: SYG 1925 of 2014

Judgment of: Judge Manousaridis

Hearing date: 23 March 2015

Delivered at: Sydney

Delivered on: 1 May 2015

REPRESENTATION

Solicitors for the Applicant: Ms K P Farmer of TressCox Lawyers

Ms L Williams appeared by telephone.

ORDERS

1. The application for final relief filed by the Official Trustee on 10 July 2014 and the application in a case filed by Lydia Williams on 23 December 2014 are to be set down for hearing on a day to be appointed immediately after the publication of these reasons.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1925 of 2014

APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF THE BANKRUPT ESTATE OF DAVID AUSTIN KELLY

Applicant

REASONS FOR JUDGMENT

1. On 10 July 2014 the Official Trustee, who is the trustee in bankruptcy of the estate of Mr David Austin Kelly, filed an application for an order under s.146 of the Bankruptcy Act 1966 (Cth) (Act). That section provides that, where a bankrupt fails to file a statement of his or her affairs, the Court may make an order, on the application of the trustee, that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with Division 5 of Part VI of the Act as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.

2. Mr Kelly, who is now deceased, failed to file a statement of affairs. The precondition for the exercise of the power conferred by s.146 of the Act, therefore, is satisfied; and on the face of the affidavit evidence the Official Trustee has filed in support of its application, it appears the Official Trustee has taken all steps that were reasonably open to it to ascertain the identity of all creditors of the estate of Mr Kelly, and that it has given notice of its application under s.146 to all of the creditors of Mr Kelly’s estate.[1]

   [1] See affidavit of N Patney, 18.07.14

3. The Official Trustee’s application, however, is opposed by Ms Lydia Williams. Ms Williams was the de facto partner of Mr Kelly at the time Mr Kelly died, and she was granted letters of administration of his estate. Ms Williams opposes the Court making an order under s.146 because she claims she holds a proprietary interest in the only remaining asset of the estate, being a bank account with a credit balance of around $55,000. That represents the proceeds of sale of a property in Mosman (Property). Ms Williams also claims she is a creditor of the estate.

4. The matter has come before me a number of times. The last occasion was on 23 March 2015. The matter had been set down on that day for the hearing of an application in a case Ms Williams filed on 23 December 2014. That application in a case was originally made returnable on 25 February 2015 but was later adjourned to 23 March 2015. 

5. My understanding of the purpose of the hearing on 23 March 2015 was to determine whether Ms Williams had an arguable case that she has an interest in the assets of the estate of Mr Kelly. My understanding arose from what occurred at a hearing on 9 December 2014. At that hearing, I proposed that the matter proceed on the basis that I would consider whether the material Ms Williams had filed and was shortly to file would disclose an arguable case that Ms Williams had a proprietary interest in the assets of Mr Kelly’s estate. I said that if I were satisfied that the material would disclose an arguable case, further directions would be made for the determination of whether Ms Williams does in fact have a proprietary interest in Mr Kelly’s estate. If, on the other hand I were to find Ms Williams does not have an arguable case, I proposed to make an order under s.146 of the Act. I made directions to give effect to that proposal.

6. At the hearing on 23 March 2015 Ms Williams applied for an adjournment. After hearing what she had to say, I directed that the matter be listed for judgment on 1 May 2015. I informed Ms Williams and Ms Farmer, who appeared for the Official Trustee, that on 1 May 2015 I would deliver reasons for judgment that would deal with one and possibly two questions. The first would be whether I should grant to Ms Williams the adjournment she sought. The second question would arise if I were not to grant Ms Williams the adjournment she sought; and that question would be whether, on the material she has filed, Ms Williams has an arguable case that she has an interest in the estate. I also indicated to Ms Williams and Ms Farmer that if I were to conclude that Ms Williams does not have an arguable case, I would deal with the Official Trustee’s application for an order under s.146 of the Act. Finally, although I set the matter down for judgment on these two issues, I made a direction permitting Ms Williams to file and serve any additional evidence on which she wishes to rely, and granted the parties liberty to apply.

7. In the course of preparing my reasons for judgment on whether I should grant Ms Williams a further adjournment, it became apparent to me that the manner in which I proposed to deal with the matter did not take into account the orders Ms Williams seeks in the application in a case she filed. In particular, it did not take into account that in her application in a case Ms Williams was seeking, among other things, the following two orders:

   4.An adjournment be granted or alternatively orders for AFSA dealt with this matter by alternate [sic] dispute resolution on the grounds of disability (Disability Discrimination Act s6) and Legal Services Directions 2005 appendix B part 2 under s55ZF of the Judiciary Act 1903

   5.Orders that the matter return to court if alternate [sic] dispute resolution is unsuccessful

8. In those circumstances, it would be quite wrong for me to proceed to consider whether Ms Williams has or does not have an arguable case that she holds an interest in the estate of Mr Kelly without first hearing Ms Williams’ application for these orders. I do not propose, therefore, to give judgment on whether Ms Williams has an arguable case that she holds an interest in the estate of Mr Kelly. Instead, I propose to set down for hearing both the application in a case filed by Ms Williams on 23 December 2014 and the application the Official Trustee filed on 10 July 2014 for an order under s.146 of the Act.

9. There is another reason for my proposing not to give judgment. I have formed the view that I have managed this proceeding with excessive informality. That was due, in part, to the many indulgences I granted to Ms Williams in the course of the proceeding to file materials in support of her objections and, in part, to my attempting to navigate a simple way of deciding those objections. That resulted in my setting the matter down for the delivery of judgment without formally reading any affidavits and, more importantly, without affording Ms Williams a meaningful hearing on her objections and on her application for an order that the matter be referred to alternative dispute resolution.

10. On the publication of these reasons, I will set down for hearing both the application in a case filed by Ms Williams, and the Official Trustee’s application. I propose to set the matters down for hearing for one day within four to six weeks.

11. I regret the delay and additional costs this will impose on the parties. However, to have proceeded in the manner I intended to proceed would likely have resulted in the entire proceeding miscarrying.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date: 1 May 2015