Aston v Barnet in Her Capacity as the Trustee of the Property of Aston

[2019] FCCA 2523

FEDERAL CIRCUIT COURT OF AUSTRALIA

ASTON v BARNET IN HER CAPACITY AS THE TRUSTEE OF THE PROPERTY OF ASTON [2019] FCCA 2523

Catchwords:
BANKRUPTCY – Application by bankrupt in respect of his Trustee’s decision to issue contribution assessment.

Legislation:

Bankruptcy Act 1966 (Cth), ss.139W, 139Y, Schedule 2
Insolvency Practice Schedule (Bankruptcy) s.90-15

Cases cited:

Peled v Roufeil [2017] FCCA 2342

Re Ellis; ex parte Jefferson [1995] FCA 1072
Re Nelson; Nelson v Inspector-General in Bankruptcy [1994] AATA 589

Applicant: PETER ASTON

Respondent: KATHERINE E BARNET IN HER CAPACITY AS THE TRUSTEE OF THE PROPERTY OF ASTON

File Number: SYG 3273 of 2018

Judgment of: Judge Altobelli

Hearing date: 17 July 2019

Date of Last Submission: 17 July 2019

Delivered at: Sydney

Delivered on: 12 September 2019

REPRESENTATION

Counsel for the Applicant: Mr Le Plastrier

Solicitors for the Applicant: Somerset Ryckmans

Counsel for the Respondent: Mr Aspinall

Solicitors for the Respondent: Matthews Folbigg Lawyers

ORDERS

1. The Application filed 23 November 2018 be dismissed.

2. The Applicant to pay the Respondent’s costs as agreed or as assessed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3273 of 2018

PETER ASTON

Applicant

And

KATHERINE E BARNET IN HER CAPACITY AS THE TRUSTEE OF THE PROPERTY OF ASTON

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Applicant, who is now a discharged bankrupt, invites the Court to exercise its jurisdiction under s.90-15 of the Bankruptcy Act 1966 (Cth) (hereafter referred to as ‘the Act’), Schedule 2, Insolvency Practice Schedule (Bankruptcy), to set aside an income contribution assessment issued by the Respondent, his bankruptcy Trustee, under s.139W of the Act on 31 July 2018.

2. The relevant income contribution assessment period (hereafter referred to as ‘CAP’) is 30 September 2015 to 29 September 2016 (referred to as CAP1).  There has only been one CAP to date.  The Respondent assessed the Applicant to make income contributions totalling $79,022.86 for CAP1.  The assessment explained that the Applicant was assessed as having a total income of $232,856.45.  This included the total value of fringe benefits in an amount of $37,533.60.  Whilst the Applicant initially sought to challenge this latter amount at the hearing this challenge was withdrawn.  The focus for present purposes, therefore, is the amount of $195,322.85, which was described as his gross assessed income of $200,750, less income tax, $1,412.15, and less Medicare levy, $4,015.

3. The income figure of $200,750 is a deemed income, the formulation of which will be discussed below.

4. The Applicant contends that he has suffered loss or damage because of the actions of the Trustee in deeming his income to be $200,750 in respect of CAP1.  Moreover, the Applicant contends that the Trustee's action is so serious that it not only affects him, but undermines the public confidence in registered Trustees as a group.  In short, the Applicant contends that the assessment far exceeds a reasonable subjective assessment of his income, and thus the Court would exercise its discretion to set aside the assessment.

5. These Reasons for Judgment explain why the Court has ordered that the Application filed 23 November 2018 be dismissed.

Background

1. The Applicant became a bankrupt once a Debtor’s Petition that he filed was accepted by the Official Trustee on 30 September 2015.  The Respondent replaced the Official Trustee as Trustee of the Applicant's bankrupt estate on 2 December 2015.

2. Between 9 October 2013 and 11 September 2015, the Applicant was the sole Director and Secretary of a company known as Bishop Chase Pty Limited.  His wife, Karen Aston, replaced him as the sole Director and Secretary on 11 September 2015, and has remained so to date.

3. The statement of affairs completed by the Applicant on 29 September 2015 relevantly disclosed that he had received $103,000 in income in the previous 12 months, and he expected to receive $48,000 in income in the following 12 months.  The document also disclosed that he had unsecured creditors totalling nearly $12 million, and apart from two superannuation accounts had disclosed assets with a value of just over $3,000, being moneys owed to him.

4. The subsequent investigation undertaken by the Trustee indicated that the Applicant was the Managing Director of Bishop Chase Pty Limited.  Indeed, this was not seriously put in contention by the Applicant.

5. The evidence discloses that the Respondent had some quite serious concerns about the Applicant's compliance with requests for information, all legitimately made pursuant to the Act.  Moreover, even the Inspector-General came to the same view following the Applicant's request to carry out a review of the Respondent's decision.  A common theme of the decisions made by the Respondent Trustee, and the Inspector-General, emerged.  Both concluded, for example, that the disclosed income of the Applicant and his wife in the 2015/2016 financial year was just under $44,000.  However, their annual rental commitment was $75,000.  Both the Inspector-General and the Respondent, in effect, concluded that the Applicant had undisclosed income or financial support which could be characterised as income under the Act.  Both emphasised to the Applicant that he had not provided sufficient evidence of his income earned, and his affairs generally, to warrant a conclusion other than that made by the Respondent Trustee.  Moreover, the Inspector-General agreed with the Respondent Trustee's methodology for calculating the Applicant's deemed income based on various industry salary guides.  The Inspector-General accepted that the methodology may well be a crude measure of the Applicant's income, particularly having regard to the Applicant's asserted circumstances but, again, this was the only reasonable conclusion, having regard to the Applicant's lack of disclosure and cooperation.

6. The basis of the Respondent Trustee's calculation of the Applicant's deemed income is explained at paragraphs 37-44 of the Trustee's affidavit filed 23 May 2019.  Here, the Trustee explains that she had formed the view that the Applicant was performing services for Bishop Chase Pty Limited which were of greater value than the remuneration which he actually received.  She formed a view as to the classification of the Applicant's employment almost entirely based on representations made by the Applicant himself, or his employer, Bishop Chase, on its own website.  Accordingly, and having regard to the calculation set out at paragraph 43 of her affidavit, she formed a conservative view of the Applicant's deemed income by reference to three separate salary guides, averaged out.  Moreover, the Respondent concluded that the Applicant was, in fact, working full time in consulting in management work carried out by Bishop Chase.

7. By contrast, the Applicant's case is that the Respondent had significantly miscalculated the contribution assessment.  The Applicant contended that he could not work full time due to illness, and that the deemed income had no correlation whatsoever with either the Applicant's actual income, or that of Bishop Chase.  Moreover, the Applicant contended that his bankruptcy had an impact on his ability to earn income, as did the liquidation of companies in which the Applicant was previously involved.  The Applicant contended that for all practical purposes Bishop Chase simply failed as a consulting company, and thus it was irrational for the Respondent to undertake a salary analysis of the type in fact undertaken.

The evidence

1. The Applicant relied on the following documents:

   a)Application filed 23 November 2018;

   b)Affidavit of Peter Aston affirmed and filed 11 July 2019;

   c)Affidavit of Peter Aston sworn and filed 23 November 2018;  and

   d)Outline of submissions filed 2 July 2019.

2. The Respondent relied on the following documents:

   a)Affidavit of Katherine Elizabeth Barnet affirmed and filed 23 May 2019; and

   b)Outline of submissions filed 15 July 2019.

3. The following documents were tendered as evidence during the course of the proceedings:

   a)Documents produced pursuant to subpoena on Illawarra Shoalhaven Local Health District;

   b)Documents relating to the Bobbin Head Cycle Classic; and

   c)City of Sydney documents and google map images relating to Red White Blue Catering Group Pty Ltd.

The applicable law

1. Section 90-15 of the Insolvency Practice Schedule (hereafter referred to as ‘the Schedule’), replaced the now-repealed s.178 of the Bankruptcy Act. Section 90-15:

   Court may make orders in relation to estate administration

   Court may make orders

   (1)  The Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate.

   Orders on own initiative or on application

   (2)  The Court may exercise the power under subsection (1):

   (a)  on its own initiative, during proceedings before the Court; or

   (b)  on application under section 90-20.

   Examples of orders that may be made

   (3)  Without limiting subsection (1), those orders may include any one or more of the following:

   (a)  an order determining any question arising in the administration of the estate;

   (b)  an order that a person cease to be the trustee of the estate;

   (c)  an order that another person be appointed as the trustee of the estate;

   (d)  an order in relation to the costs of an action (including court action) taken by the trustee of the estate or another person in relation to the administration of the estate;

   (e)  an order in relation to any loss that the estate has sustained because of a breachof duty by the trustee;

   (f)  an order in relation to remuneration, including an order requiring a person to repay to the estate of a regulated debtor, or the creditors of a regulated debtor, remuneration paid to the person as trustee.

   Matters that may be taken into account

   (4)  Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

   (a)  whether the trustee has faithfully performed, or is faithfully performing, thetrustee's duties; and

   (b)  whether an action or failure to act by the trustee is in compliance with this Act and the Insolvency Practice Rules; and

   (c)  whether an action or failure to act by the trustee is in compliance with an order of the Court; and

   (d)  whether the regulated debtor's estate or any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the trustee; and

   (e)  the seriousness of the consequences of any action or failure to act by the trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.

   Costs orders

   (5)  Without limiting subsection (1), an order mentioned in paragraph (3)(d) in relation to the costs of an action may include an order that:

   (a)  the trustee or another person is personally liable for some or all of those costs; and

   (b)  the trustee or another person is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to some or all of those costs.

   Orders to make good loss sustained because of a breach of duty

   (6)  Without limiting subsection (1), an order mentioned in paragraph (3)(e) in relation to a loss may include an order that:

   (a)  the trustee is personally liable to make good some or all of the loss; and

   (b)  the trustee is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to the amount made good.

   Section does not limit Court's powers

   (7)  This section does not limit the Court's powers under any other provision of this Act, or under any other law.

2. Division 4B of Part VI of the Act establishes a scheme for contribution by a bankrupt and recovery of property. In this regard, s.139W relates to assessment of a bankrupt's income and contribution:

   Assessment of bankrupt's income and contribution

   (1)  As soon as practicable after the start of each contribution assessment period in relation to a bankrupt, the trustee is to make an assessment of the income that is likely to be derived, or was derived, by the bankrupt during that period, of the actual income threshold amount that is applicable in relation to the bankrupt when the assessment is made and of the contribution (if any) that the bankrupt is liable to pay in respect of that period under section 139S.

   (2)  If at any time, whether during or after a contribution assessment period, any one or more of the following paragraphs applies or apply:

   (a)  the trustee is satisfied that the income that is likely to be derived, or was derived, by the bankrupt during that period is or was greater or less than the amount of that income as assessed by the last preceding assessment in respect of that period;

   (b)  the base income threshold amount increased or decreased after the making of the last preceding assessment in respect of that period and before the end of that period;

(c)  the trustee is satisfied that the number of the bankrupt's dependants increased or decreased after the making of the last preceding assessment and before the end of that period;

the trustee is to make a fresh assessment of the income that is likely to be derived, or was derived, by the bankrupt during that period, of the actual income threshold amount that is applicable in relation to the bankrupt when the assessment is made and of the contribution (if any) that the bankrupt is liable to pay in respect of that period.

(3)  The powers of the trustee under subsection (2) may be exercised on the trustee's own initiative or at the bankrupt's request, but the trustee is not required to consider whether to exercise those powers at the bankrupt's request unless the bankrupt satisfies the trustee that there are reasonable grounds for the trustee to do so.

(4)  As soon as practicable after the making of an assessmentthe trustee must give to the bankrupt written notice setting out particulars of the assessment and informing the bankrupt about the possibility of a variation under section 139T.

1. For present purposes, s.139Y is relevant. It sets out the circumstances in which a trustee may regard a bankrupt as receiving reasonable remuneration:

   Trustee may regard bankrupt as receiving reasonable remuneration

   (1)  If:

   (a)  the bankrupt is engaging or has engaged during a contribution assessment period in employment or other work or in activities that resemble employment or other work; and

   (b)  the bankrupt does not receive or did not receive any remuneration in respect of the employment, work or activities or receives or received remuneration that is less than the remuneration (in this subsection called the reasonable remuneration ) that:

   (i)  in the case of employment where an industrial instrument prescribes rates or minimum rates of salary or wages for the employment--might reasonably be expected to be or to have been received by the bankrupt in respect of the employment by virtue of the industrial instrument; or

(ii)  in any other case--might reasonably be expected to be or to have been received by a person who engaged in similar employment, work or activities where there was no relationship or other connection between that person and the person for whom the employment, work or activities were carried out;

then, for the purpose of making an assessment, the trustee may determine that the bankrupt receives or received the reasonable remuneration in respect of the employment, work or activities.

(2)  If:

(a)  the bankrupt enters or entered during a contribution assessment period into any transaction that might reasonably be expected to produce or to have produced income; and

(b)  the bankrupt does not derive or did not derive any income from the transaction or derives or derivedincome that is less than the income (in this subsection called the reasonable income ) that might reasonably be expected to be or to have been derived if the transaction were or had been entered into at arm's length;

then, for the purpose of making an assessment, the trustee may determine that the bankrupt derives or derived the reasonable income from the transaction.

1. The Respondent deemed the Applicant to be receiving an income of $200,750, having satisfied herself that both ss.139Y(1)(a) and (b)(ii) had been satisfied. In other words, the Respondent contended that the Applicant was engaged in employment, and that the level of remuneration the Applicant would have received had he not been working for a company controlled by his wife, Bishop Chase Pty Limited, was $200,750. Counsel for the Respondent Trustee submitted, correctly, the Court acknowledges, that s.139Y(b)(ii) does not involve considering what the Applicant actually received, or what his employer actually earned, but, rather, it involves looking objectively at what is a reasonable expectation for the level of remuneration which the Applicant would have received had he undertaken that work for an unrelated employer.

2. The onus of proof was on the Applicant to show that the Respondent's approach to the factual investigation was incorrect.

Credit issues

1. Counsel for the Respondent submitted in closing submissions that the Court would not find the Applicant to be a witness of truth.  The issue of the Applicant's credibility is, therefore, an issue for the Court to determine. 

2. The Applicant was cross-examined by Counsel for the Respondent.  He was an unimpressive witness.  There were often long pauses before he answered relatively uncontentious questions.  Examples include when Bishop Chase moved into its office in Bligh Street, Sydney, and where the Applicant purchased coffee when he went to work.  The latter was somewhat remarkable given the evidence contained in the Applicant's own bank statements to which further reference will be made in due course.  At times, the Applicant was evasive in cross-examination.  When it was put to him that his bank statements evidenced a course of his conduct that involved regularly attending the Bishop Chase Office in Bligh Street, Sydney, purchasing coffee at a nearby café, and parking the car in a nearby car parking station, it took him an inexplicably long period of time to accept that the transactions recorded reflected his actions.

3. Concerns about the Applicant's credibility extend well beyond his demeanour in cross-examination.  In paragraph 10(c) of his affidavit, sworn 23 November 2018, the Applicant deposed to three significant matters, all of which, the Court concludes, were within his personal knowledge.  He deposed that:

   a)He had allocated from 1-1.5 days per week on work for Bishop Chase Pty Limited;

   b)"There were long periods when I was not at work due to illness";

   c)"During the period from 2015 to 2016, I was hospitalised and in recovery at Wollongong Hospital and SAN Hospital".

4. The Court finds that each contention was plainly incorrect.

5. The first contention was inconsistent with a later statement made by the Applicant at paragraph 12 of his affidavit, where he deposed:

   I estimate that I worked on average (including my time incapacitated medically) one to 1.5 days per week.

   That assertion, the Court notes, is quite different to the assertion at paragraph 10(c), where there is no hint of the days at work being an average.  Moreover, the evidence he gave in re-examination, rather than clarify the evidence he gave in cross-examination, merely confused it.  He was asked in cross-examination how long he worked on the days that he came to work, but he provided no clear answer, other than seeking to distance himself from any proposition that he worked between 9:00am and 5:00pm.  He said in re-examination that there were some days where he would go to the library, and some days where he would walk around, and that he worked when he was feeling well.

6. When the Applicant's bank statements are examined carefully, the strong impression formed is that he attended the Bishop Chase office in Bligh Street, Sydney more often than not, and often four days each week.  The Applicant's subjective evidence is not to be preferred to the objective story presented in his bank statements, which present a picture of a man regularly attending work, in the normal course of life and business.

1. The second contention at paragraph 10(c), that there were long periods that he was not at work due to illness, is not borne out by the objective evidence.  Firstly, the evidence that the Applicant sought to lead in relation to the issue does not support the contention he himself makes.  Secondly, the bank statements suggest there were very few, if any, periods that are attributable to some form of illness or injury.  The document the Applicant produced from his general practitioner indicates that in the CAP1 period, he had a bicycle accident on 17 August 2016, and then surgical treatment to a fractured clavicle on 8 September 2016.  This is, with respect, hardly evidence of long periods when he was not at work due to illness.  Moreover, there is nothing in his bank statements before 17 August which are consistent with his assertion of long periods away from work due to illness.

2. The third contention is that during the period from 2015 to 2016, he was hospitalised and in recovery at Wollongong Hospital and SAN Hospital.  One would have thought, with respect, that this was an assertion easy to prove.  Notwithstanding that, the only evidence the Applicant adduced was an admission to the Sydney Adventist Hospital on 10 February 2015, well before the CAP1 period, and in any event, with no evidence to explain how that (or any other) admission resulted in an absence from work.

3. At paragraph 9 of his affidavit of 11 July 2019, the Applicant asserts that he took "significant time off for operations, medical tests, and recovery".  He contends that as a result of this, he was not in a position to commit to, or undertake, work for longer periods "than those I worked".  This evidence purported to reply to paragraphs 42 and 43 of the Trustee's affidavit, where she sets out the basis for the deemed income calculation.  At paragraph 10 of his affidavit, the Applicant asserts that due to medical issues he had at the time, he would not have been able to undertake full time or significant work to the level as deemed by the Respondent in her assessment.  Here, the Applicant responds to paragraph 44 of the Trustee's affidavit, again in relation to the deemed income.  Regrettably, as with other assertions made by the Applicant, they are bald assertions unsupported by any corroborative evidence, in circumstances where, if they had been true, they could easily have been proved, or at least corroborated.

4. A consistent theme of the Trustee's evidence is that the Applicant had not cooperated with the provision of relevant information, and had, in effect, failed to provide adequate disclosure as to both his personal and financial affairs, so that the Trustee might discharge her statutory duties.  The example set out above adequately establish the Trustee's concerns.

5. There were further problems with the Applicant's evidence, which lead the Court to conclude that his evidence is unreliable.  The Applicant was plainly engaged in bike riding activities, notwithstanding the assertions that he made (referred to above) above the debilitating impact of his health issues and injuries.  On 20 March 2016, the Applicant competed in the Bobbin Head Cycle Classic and finished the hill climb in 14 minutes, 33 seconds, thus placing him 938 of 1296 competitors.  Some might say that this is an impressive performance for a man who, one year and one month earlier, went through a total right nephrectomy.  To the extent, however, that the Applicant implied in his case that the removal of his kidney was a reason why he could not work, his performance in the Bobbin Head Cycle Classic suggests quite the contrary.  The documents tendered suggest that this particular ride had a duration of 104 kilometres.

6. The Applicant was cross-examined about the bank statements produced establishing that he travelled to Mackay on eight occasions between December 2015 and August 2016.  He explained that he did not know whether he had been there eight times, even though his bank statements suggest just that.  He denied that the purpose of his attendance in Mackay was because Bishop Chase was involved in a development project there.  He denied that Bishop Chase was looking for business opportunities there.  The Court was left with a strong impression that the Applicant knew far more about the real purpose and nature of his travels to Mackay than he was prepared to let on.  There is little doubt that the travel was for business purposes, as his bank statements indicate that he was reimbursed.  If there was an alternate explanation, it could easily have been advanced, even in cross-examination, but it was not.

7. The last significant issue to emerge from cross-examination, which will be noted in the present context, is the completely unexplained differences between the purported pay slips in respect of the Applicant's employment and the amounts he actually received into his personal bank account.  Even though the Applicant was Managing Director of Bishop Chase, he could not explain why the pay slips did not accurately represent what he was actually paid.  Counsel suggested to him that perhaps what had, in fact, occurred was that the pay slip was created after the fact, for the purposes of the present litigation.  The Applicant denied this.  The Court concludes that Counsel's assertion was probably correct.

8. In the circumstances, and having regard to the evidence summarised above, the Court accepts the accuracy of Counsel for the Respondent's submission that the Applicant is not a witness of truth. 

9. What are the implications of this?  It pervades the entirety of the Applicant's case.  The Applicant's evidence regrettably undermines the valiant submissions made on his behalf by Counsel.  Thus the submission that the Trustee had significantly miscalculated the contribution assessment because the Applicant was unable to work due to illness cannot be accepted.  The submission that the contribution assessment was miscalculated, having regard to the Applicant's actual income, as well as that of Bishop Chase, cannot be sustained in the absence of complete disclosure about what, exactly, the Applicant did by way of work during the CAP1 period, as well as the precise nature of the activities of his employer, Bishop Chase Pty Limited.  The absence of any real evidence about the company's activities in Mackay during the CAP period adds to the confusion in this regard.  Moreover, implicit in the Applicant's case was that the Respondent was not entitled to rely on the Applicant's own representations as to his business qualifications, experience and skills contained in the Bishop Chase marketing material, his LinkedIn entry, and the company website.  The Applicant's Counsel's contention that these representations were aspirational, indeed far from correct in terms of actuality, are contentions the Court cannot accept.  The Applicant represented himself to the world as having a certain skillset, knowledge and experience, and he cannot now complain that the Trustee relied on his own representations in assessing a notional income in circumstances where there is a strong inference adverse to the Applicant that he has not properly disclosed his actual income.

Are adverse credit findings immaterial?

1. Counsel for the Applicant sought to rely on my earlier decision in Peled v Roufeil [2017] FCCA 2342 (31 October 2017) at 56-58:

   56.    Having regard to the Court’s findings of fact, the present focus is on the Trustee’s determination not of the income the Applicant actually received (which is irrelevant) but rather of what he might reasonably be expected to have received having regard to what a person engaged in similar employment would have received. The Court accepts that this is an evaluative process which does not admit of any precise mathematical calculation: Prescott v Inspector-General in Bankruptcy [2013] AATA 680 at [89]. Was the Trustee’s formulation of the amount payable in respect of each income contribution period reasonable in the sense that it was reasonably based?

   57.    At one level there is the obvious difficulty that it was, in effect, the Applicant’s non-disclosure of the true extent of his involvement in the business affairs of Hopetoun that led to the Trustee issuing contribution assessments of which the Applicant now complains. At a discretionary level it might simply be argued that if the Applicant had been forthright, that these proceedings would have been unnecessary. This is a discretionary consideration that might result in the Court not exercising the discretion it has under section 178 even if the Court found the Trustee to have acted unreasonably.

   58. On the other hand, however, the evidence in this case demonstrates that whilst the Trustee was perfectly entitled to conclude that the Applicant was less than forthright in disclosing the true nature and extent of his involvement in the business affairs of Hopetoun, the assumptions that he made in issuing the assessment under section 139Y were flawed, for reasons that will be discussed below. On the facts of this case, therefore, the Applicant’s conduct (for want of a better word) does not necessarily disentitle him to relief under section 139Y but may well disentitle him to any order for costs that might otherwise have followed from a successful application under section 139Y.

2. Whilst it is true that the Applicant in Peled and the present Applicant have much in common, i.e. both Trustees were perfectly entitled to conclude that they were less than forthright in disclosing the true nature and extent of their involvement in the business affairs of the company for which they worked, it does not necessarily follow that in the exercise of a discretion the Court would necessarily give the present Applicant the benefit of the doubt in the same way as it did Mr Peled. 

3. Mr Peled was a relatively unsophisticated building project manager who was involved in providing building services, generally on a small scale, and normally for existing homes or home units.  Mr Peled had no tertiary qualifications.  Whether he was a labourer, supervisor, or project manager, the scope of his operations were modest compared to that of the present Applicant, whose academic and professional qualification are both extensive and arguably impressive, if true.  Mr Peled's primary duty was to deal with third-party contractors in relation to relatively modest building work.  The differences between the Applicants are, with respect, stark.  The present Applicant has an MBA, a Master of Management, Diploma of Finance, and Bachelor of Electrical Engineering.  He founded and operated an Australian-based management and development company with over $26 million in projects per annum.  He owned and operated a top 100 Australian software company. 

4. The present Applicant's Trustees were certainly entitled to adopt the methodology that they adopted in calculating his notional income.  Mr Peled's trustee was not so entitled.  The two cases are, with respect to the Applicant, completely different on their facts.  The present Applicant's subterfuge was of a much greater scale.

Conclusion

1. The Court is comfortably satisfied from the available evidence that the Respondent Trustee was entitled to conclude that the bankrupt was engaged in employment during CAP1, and that he did not receive the level of remuneration as might reasonably be expected to have been received by a person who engaged in similar employment, work or activities, where there was no relationship or connection between the bankrupt and the person for whom the employment, work or activities were carried out.  The Respondent was well entitled to consider the Applicant's own representations of his qualifications, skills and experience in assessing the level of remuneration which the Applicant would have received had he undertaken work for an unrelated employer.  It is ironic that at all relevant stages, whether with the Trustee, the Inspector-General, or this Court, the Applicant could have led evidence that might have better assisted his claim.  However, the lack of credibility of the Applicant's own evidence, and the significant absence of relevant evidence, all create a very strong impression that his actual income was much greater than that which he asserted, and indeed it is possible that the notional income calculated by the Trustee is reasonable. 

2. The Court does not accept that the decision in Re Nelson; Nelson v Inspector-General in Bankruptcy [1994] AATA 589 (15 August 1994) assists the Applicant. There was no suggestion in Nelson, for example, that the Applicant there had not cooperated with his trustee or had failed to make proper disclosure, unlike the circumstances of the present case.  It may well be that in Nelson the Applicant never made representation about his qualifications, skills and experience that warranted the Trustee making the assessment for contribution as he did.  The present case stands in strong contrast.

3. In any event, even if this Court were persuaded that there was some substance in the Applicant's complaints, it would nonetheless decline to intervene.  The present case is similar to the decision of Drummond J in Re Ellis; ex parte Jefferson [1995] FCA 1072. In that case, his Honour observed that Mr Ellis had not given the Trustees the level of cooperation required under the Act, and thus should not be permitted to rely on the position so contributed to by his actions, to his own advantage. As Counsel for the Respondent submitted, those remarks are apt in the present case.

4. The Application should be dismissed, with the Applicant paying the Respondent's costs, as agreed or as assessed.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Associate: 

Date:     12 September 2019