Ayoub and Insolvency and Trustee Service Australia (Inspector-General in Bankruptcy)
[2002] AATA 465
•17 June 2002
DECISION AND REASONS FOR DECISION [2002] AATA 465
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2001/789
GENERAL ADMINISTRATIVE DIVISION )
Re JEANETTE AYOUB
Applicant
And INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA (INSPECTOR-GENERAL IN BANKRUPTCY)
Respondent
DECISION
Tribunal Ms G Ettinger – Senior Member
Date 17 June 2002
PlaceSydney
Decision The Administrative Appeals Tribunal affirms the decision of the Inspector-General in Bankruptcy of the Insolvency and Trustee Service Australia ("ITSA"), dated 21 May 2001, refusing the application of Mrs Jeanette Ayoub, wife of bankrupt Mr Antonious Ayoub, that ITSA exercise a discretion pursuant to regulation 16.10 of the Bankruptcy Regulations 1996 to waive or remit the whole or part of the Official Trustee's fees, and pursuant to section 283 of the Bankruptcy Act 1966 that ITSA remit the realisations charge.
..............................................
Ms G Ettinger
Senior Member
CATCHWORDS
Bankruptcy - whether discretion should be exercised to remit or waive fees of Official Trustee and realisations charge - whether exceptional circumstances or undue hardship - decision affirmed.
LEGISLATION
Bankruptcy Act 1966 s 283
Bankruptcy (Estate Charges) Act 1997 ss 6,7,8
Bankruptcy Regulations 1996 rr 16.07(4), 16.10
CASES
Stanley Faulkner v Inspector General in Bankruptcy [1998] AATA 632
Re Scott Pty Ltd and Minister for Primary Industries and Energy (1994) 35 ALD 157
Re Teik Hok Lim and Department of Employment, Education and Training (1991) 22 ALD 201
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Exell v Inspector-General in Bankruptcy (2000) 30 AAR 320
Rukat v Rukat [1975] Fam 63
REASONS FOR DECISION
17 June 2002 Ms G Ettinger-Senior Member
The decision under review before the Administrative Appeals Tribunal ("the Tribunal") was the decision of the Inspector-General in Bankruptcy of the Insolvency and Trustee Service Australia ("ITSA"), dated 21 May 2001, (T8), refusing the application of Mrs Jeanette Ayoub, wife of bankrupt Mr Antonious Ayoub, the exercise of a discretion pursuant to regulation 16.10 of the Bankruptcy Regulations 1996 ("the Bankruptcy Regulations") to waive or remit the whole or part of the Official Trustee's fees, and pursuant to section 283 of the Bankruptcy Act 1966 ("the Bankruptcy Act"), to remit the realisations charge.
The Applicant, Mrs Jeanette Ayoub did not attend the hearing and was represented by her son, Mr Charbel Ayoub who has been handling her appeal and had signed most of the correspondence dealing with the matter over the whole period.
The Respondent, ITSA, was represented by Ms A Pearce, solicitor of the Australian Government Solicitor.
ISSUES BEFORE THE TRIBUNALThe issues to be decided were:
Whether it was appropriate for the Tribunal to exercise its discretion pursuant to regulation 16.10 of the Bankruptcy Regulations 1996 to remit or waive the Official Trustee's fee paid by Mrs Ayoub on the basis that "undue hardship" would otherwise be suffered by her, or because of other "exceptional circumstances"; and
Whether it was appropriate for the Tribunal to exercise its discretion pursuant to section 283 of the Bankruptcy Act 1966, to remit the realisations charge on the basis that failure to do so would cause "hardship" to be suffered by the Applicant, and it was appropriate to remit the realisations charge.
LEGISLATION
The relevant legislation in this matter is the Bankruptcy Act 1966, in particular section 283, regulation 16.07(4), and 16.10 of the Bankruptcy Regulations 1996 and sections 6, 7 and 8 of the Bankruptcy (Estate Charges) Act 1997, which follow as relevant.
Section 283 of the Bankruptcy Act affords a discretion to the Inspector-General, and hence the Tribunal, with regard to remitting interest charges, realisations charges or late payment penalties.
"283 Remission of interest charge, realisations charge and late payment penalty
(1) The Inspector-General may remit an amount of interest charge, realisations charge or late payment penalty that is payable but has not been paid if the Inspector-General thinks that :
(a) failure to remit the amount would cause a person hardship;
and
(b) it is appropriate to remit the amount.
..."Regulation 16.07of the Bankruptcy Regulations deals with fees payable to the Official Trustee and as relevant regulation 16.07(4) follows:
"REG 16.07 Fees payable to the Official Trustee
…(4) For the purposes of subregulation (3), the prescribed amount in respect of an estate or a debtor is determined using the formula:
amount realised - (business costs + securities)
where:
amount realised, subject to subregulations (5) and (6), means the total amount realised, or brought to credit, by the Official Trustee in the estate or in relation to the debtor, as the case may be.
business costs means the amount paid by the Official Trustee in carrying on the business of the bankrupt, deceased person or debtor.
securities means the amount paid to secured creditors in respect of their securities."The Inspector-General can also exercise a discretion where appropriate with regard to waiver or remission of fees pursuant to regulation 16.10 of the Bankruptcy Regulations.
"Waiver or remission of fees by Inspector-General
16.10. (1)Subject to subregulation (2), the Inspector-General may waive or remit the whole or part of any fee.
(2) A fee may only be waived or remitted, whether wholly or in part, if the Inspector-General is reasonably satisfied that:
(a)payment of the fee by the person liable to pay it has imposed, or would impose, undue hardship on the person; or
(b) because of other exceptional circumstances, it is proper and reasonable to do so.
(3) A decision under subregulation (1) must be notified in writing to:
(a) the person concerned; and(b)except where the fee is payable to the Inspector-General - to the officer to whom the fee is or, but for the waiver or remission, would be payable.
(4) In this regulation:
"fee" means a fee payable under a provision, other than regulation 16.04, of this Subdivision, or prescribed in Subdivision B of this Division."
The realisations charge is calculated pursuant to the Bankruptcy (Estate Charges) Act 1997 which follows as relevant:
"6 Realisations charge
(1) A charge, calculated in accordance with sections 7 and 8, is
imposed in respect of amounts received by a trustee (including the
Official Trustee) who, during a charge period:
(a) is the trustee of the estate of a bankrupt under the Bankruptcy Act 1966; or
(b) is controlling trustee in relation to a debtor whose property has become subject to control under Division 2 of Part X of the Bankruptcy Act 1966; or
(c) is the trustee of a deed of assignment or deed of arrangement executed, or a composition accepted, in relation to a debtor under Part X of the Bankruptcy Act 1966; or
(d)is the trustee of the estate of a deceased person under Part XI of the Bankruptcy Act 1966.
(2) The charge is payable by the trustee to the Commonwealth.
(3) The charge is payable within 21 days after the end of the charge
period.
7 Amount of charge payable
(1) The amount of charge payable for a charge period is an amount
equal to:
(a) 8% of the amount on which charge is payable for the period; or
(b) if a different percentage is prescribed by the regulations-theprescribed percentage of the amount on which charge is
payable for the period.
(2) The Governor-General may make regulations prescribing a rate for
the purposes of paragraph (1)(b). The rate prescribed must not be
higher than 15%.
8 Working out the amount on which charge is payable
(1) The amount on which charge is payable for a charge period is the amount realised less the permitted deductions.
(2) The amount realised is the total amount received by the trustee in the capacity referred to in subsection 6(1) during the charge period, but not including:
(a) amounts paid to the trustee by creditors under an indemnity in
respect of costs; or
(b) amounts paid to the trustee under section 305 of the Bankruptcy Act 1966.
(3) The permitted deductions are all amounts paid by the trustee in
the capacity referred to in subsection 6(1) during the charge period
that are:
(a) amounts paid by the trustee in carrying on the business of the
bankrupt, deceased person or debtor; or
(b) amounts paid to secured creditors.
(4) Once an amount has been taken into account for the purposes of
subsection (2) as an amount received, the whole or part of the amount
is not to be taken into account again as an amount received for the
purposes of another application of that subsection."
EVIDENCE BEFORE THE TRIBUNAL
The Tribunal had before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T-documents"), as Exhibit R1. As arranged, the Tribunal also received from Mr Ayoub original rate notices and other documents some days after the completion of the hearing.
The following other exhibits were also before the Tribunal.
ITEM DATE EXHIBIT NUMBER
Letter of Mr Charbel Ayoub and attachments Dated 18 February 2001 (sic) (2002) Exhibit A1
Letter of Mr Charbel Ayoub and attachments 17 October 2001 Exhibit A2
Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("T-Documents") T1 – T8 Exhibit R1
Letter from ITSA to Mrs J & Mr C Ayoub 6 March 2002 Exhibit R2
Calculation of Official Trustee's Fees 30 April 2001 Exhibit R3
Calculation of Official Trustee's Fees 9 July 2001 Exhibit R4
Calculation of Official Trustee's Fees 11 March 2002 Exhibit R5
Bundle of Respondent's documents including the Respondent's Statement of Facts and Contentions Exhibit R6
EVIDENCE AND SUBMISSIONS OF MR CHARBEL AYOUB ON BEHALF OF MRS AYOUB
Mr Ayoub gave evidence before the Tribunal, indicating that his mother would have to lose her home because of his father's bankruptcy if the Official Trustee's fees and the realisations charge as imposed, were not waived or remitted. He stated that the family had borrowed money to pay the fees so far, and that neither parent was in a condition to work; further that both were receiving social security in the form of disability support. He stated that he was 26 years old and had moved away from home, but that his siblings aged 24, 22 and 20 lived at home. Mr Ayoub said that Said, the 24 year old worked in a car wash, John, aged 22 was a third year apprentice tiler, and that Eilan, aged 20 worked part-time as a receptionist in a medical centre.
Mr Ayoub said that his father was a pensioner, and spent his money drinking and gambling.
Mr Ayoub said that his mother, aged 52, had swollen legs and could not stand or walk around. He said that she suffered stress and was nervous.
I noted Mr Ayoub's submission, and noted also Ms Pearce's reference to Exhibit R2, a letter of 6 March 2002, which was addressed from her to Mrs Ayoub, as follows:
"You will recall that the amount required to pay out the bankruptcy of Antonious Ayoub included an amount of $2 500 for 'possible interest claims'. I have been informed by the ITSA case officer, Thieu Trinh, that no interest was claimed by creditors in this estate. This means that the amount of $2 500 will be able to be refunded to Antonious Ayoub."
Mr Ayoub referred to the amounts of $11,421.97, the Official Trustee's fees and $4,976.91 being the realisations charge which he submitted should be remitted, waived or reduced. He submitted that the Bankruptcy Regulations referred to the bankrupt, but that it was his mother rather than his bankrupt father who had paid out the bankruptcy.
In cross-examination, Mr Ayoub was referred to a letter of 18 February 2001 (sic)(2002), and the statement therein regarding anonymous lenders of money to the family. Mr Ayoub said that the friends and relatives had remained anonymous but he had their bank account details. Mr Ayoub said that his mother had to repay the people who lent the money by instalments, and that these lenders had been informed on the basis of what the Ayoubs had been told, that people in their circumstances were able to have the fees reduced as claimed.
Mr Ayoub undertook to send the original documents relating to water rates and energy accounts, which were indeed subsequently received by the Tribunal.
Mr Ayoub submitted that if the fees were waived as claimed, his mother would have less hardship and less of a burden and would be able to stay in the house and continue to pay her mortgage. It was noted at the hearing that the mortgage payments were not in arrears.
EVIDENCE OF MR YEN THIEU TRINH – ITSA CASE MANAGERAs Ms Pearce was unable to assist with detail related to the matter before the Tribunal, Mr Trinh gave evidence before the Tribunal to clarify figures as calculated. He referred to Exhibit R4 (document B), $8,556.73 and Exhibit R5 (document C), $5,397.49, noting that the difference between these was $3,159.24 from which $2,500 interest not paid would be deducted. He said that therefore the difference was $659.24. Mr Trinh undertook to refund $3,159.24 to the Ayoubs within seven days of the hearing irrespective of any finding the Tribunal made. I noted that further that document A, (Exhibit R3), was also before the Tribunal with a different set of calculations.
I was satisfied from the evidence that the most recent calculations made on 11 March 2002 and documented in Exhibit R5, were the most accurate figures relating to this matter.
SUBMISSIONS AND CONCLUSIONSIn coming to a decision regarding whether to exercise the discretion pursuant to regulation 16.10 of the Bankruptcy Regulations to waive or remit the whole or part of the Official Trustee's fees, and similarly pursuant to section 283 of the Bankruptcy Act with regard to the realisations charge, I had to take into account the evidence before me, the legislation and case law, and the submissions of the parties.
I was mindful that Mr and Mrs Ayoub reside in the matrimonial home at 4 Atkins Road, Ermington, New South Wales 2115, in which they hold title jointly, noting also that Mr Ayoub was made bankrupt on 8 September 1999.
I express my displeasure with regard to the preparation of this matter by the Respondent. Ms Pearce did not have information important to the proper conduct of this matter prepared. Several different figures were provided as the numbers calculated for the Official Trustee's fees and the realisations charge. In that regard, although I was unable to verify the figures, after several adjournments during the hearing, and with the assistance of Case Manager Mr Trinh, I accepted that $11,421.97 (Exhibit R5) was calculated as the "prescribed amount" pursuant to regulation 16.07(4) of the Bankruptcy Regulations paid to the Official Trustee as his fees, and that $4,976.91 (Exhibit R5), was the amount for the realisations charge.
I say further that I was surprised that Mrs Ayoub did not attend at the Tribunal to give evidence as it was she who was the Applicant. Mr Charbel Ayoub told me that she has swollen legs, that she is nervous, and he told me that she is on a disability support pension. However, the only medical certificates before me were in a bundle of documents at Exhibit A1, of which one was dated 1 November 2001 and the other, 21 January 2002. On 1 November 2001, Dr Shanthini Tambimuttu of the West Ryde Medical Centre indicated that Mrs Ayoub suffered from varicose veins. A further certificate of the same practitioner dated 21 January 2002 indicated again that Mrs Ayoub had varicose veins, neck and back pain, and could not work. I was not convinced from the evidence before me that she could not have attended at the Tribunal accompanied by Mr Charbel Ayoub. However, as he has been involved in dealing with her case throughout, I was satisfied that he could so on her behalf before this Tribunal. Accordingly I did not take into account her non-attendance at the hearing in the making of the decision.
I moved then to decide whether the discretion to remit or waive the Official Trustee's fees should be exercised in Mrs Ayoub's favour taking into account the tests in regulation 16.10 of the Bankruptcy Regulations.
WHETHER THE DISCRETION PURSUANT TO REGULATION 16.10 OF THE BANKRUPTCY REGULATIONS SHOULD BE EXERCISED TO REMIT OR WAIVE THE OFFICIAL TRUSTEE'S FEES IN FULL OR IN PART
In deciding whether to exercise the discretion to remit or waive the Official Trustee's fees in full or in part, I had to consider whether payment of the fee by Mrs Ayoub would impose "undue hardship" on her or because of other "exceptional circumstances", it was proper and reasonable to do so.
I was mindful of Mr Ayoub's submissions in this regard, namely that the money paid to satisfy ITSA had been borrowed by Mrs Ayoub from friends and relations. He submitted that it was the expectation of these friends and relations, based on representations made to them by the Ayoubs, who in turn had relied on information from ITSA that the fees could be waived in Mrs Ayoub's circumstances, that early repayment of the borrowings could be expected.
In that regard, I noted that Mr Charbel Ayoub and Mr Jeff Younis, in a letter dated 17 October 2001 addressed to Ms M Desses, Conference Registrar at the Tribunal (Exhibit A2), had, in relaying their experiences with regard to events relating to the bankruptcy, written as follows:
"Mr Sandy Spiriaks advised us via an earlier telephone conversation that due to circumstances that we would be able to apply for the waiver of ITSA's fees and that this application would most likely be successful."
I noted from attachments to Exhibit A1 that $7,000 had been borrowed from Mr Louie Ayoub, a nephew of Mrs Ayoub who wrote that he had lent her the money "in order to assist her in paying out the bankruptcy of her husband. I have lent this money based on it being repaid by the end of 2001."
There was also at Exhibit A1, a letter of Mr Joseph Ayoub (said to be a cousin of Mrs Ayoub), dated 12 January 2002. He stated that he was lending the Applicant $8,000 to assist with payments in regard to the bankruptcy, but that he expected repayment. There was an unsigned letter of Mr Simon Elbayeh dated 4 January 2002 who Mr Charbel Ayoub said was a friend of his, and whose letter stated that he had lent $4,000 on the basis it would be repaid.
I noted also from the letter of 18 February 2001 (sic) (2002) from Mr Charbel Ayoub and Mr Jeff Younis, that:
"A substantial amount of the remaining funds were borrowed from friends and relatives who wish to remain anonymous. These funds of around $45,000.00 have been lent on a long-term basis with a requirement to pay interest, based on current market interest."
However, I did not have any evidence before me with regard to any repayment of loans or interest, and no evidence that the mortgage payments on the house were in arrears.
I also observed that there were no documents before me which gave indications of any undertakings the Respondent had given the Ayoubs, in writing with regard to waiver.
In considering further whether payment of the Official Trustee's fee by Mrs Ayoub would impose "undue hardship" on her or whether it was because of other "exceptional circumstances" proper and reasonable to waive or remit the fee, I was mindful that Mr Ayoub submitted his mother would suffer hardship if the house was sold, because she was on a pension and had three of her four children living at home.
Mr Ayoub also made submissions about his mother's poor state of health and in Exhibit A1, he listed a number of doctors whom she had consulted.
Ms Pearce had prepared a written outline of submissions in which she referred to the case of Stanley Faulkner v Inspector General in Bankruptcy [1998] AATA 632 in which she submitted the meaning of "undue hardship" and "exceptional circumstances" pursuant to regulation 16.10 of the Bankruptcy Regulations had been considered.
She submitted that:
"It was held by the Tribunal that what is required to satisfy the test of 'undue hardship' or 'exceptional circumstances' in subregulation 16.10 is hardship that can be characterised as more 'unusual, uncommon or exceptional' than that of any other person who has been through bankruptcy. Therefore to show undue hardship in this context it is necessary to demonstrate that some greater deprivation or suffering, referred to in Faulkner as 'illness, injury or tragedy', would result if the fees were not waived or remitted. The decision to refuse to waive the OT's fees was affirmed in Faulkner because Senior Member Ettinger was not reasonably satisfied that the hardship that Mr Faulkner was suffering could be characterised as more 'unusual, uncommon or exceptional' than that of any other person who had been through a marriage breakdown and bankruptcy, and was living on a pension."
Ms Pearce submitted that the "hardship", and "exceptional circumstances" in Mrs Ayoub's case had to be considered in the context of the bankruptcy. She submitted that the Applicant's evidence had not established that she or her family would suffer any greater hardship than others who have been bankrupt or affected by its consequences.
Ms Pearce drew my attention to the documents filed, being receipts of payments made to ITSA to pay out the bankruptcy, statements from family members who had lent money to the Applicant, medical certificates in relation to the Applicant's fitness to work, and three Parramatta City Council Rate Notices for 2001.
Ms Pearce submitted that whilst Mrs Ayoub may have to pay back moneys borrowed, as the joint owner of a property she was in a better position than most involved in bankruptcy who are generally left with no assets.
Ms Pearce submitted that Mrs Ayoub had contended that the deposit for the home and mortgage payments had been made by her and her children, and that her husband had no equity in the property, indicating that she had full ownership and that this therefore put her in an even better position.
Ms Pearce submitted that bankruptcy always involved straitened circumstances, and submitted that Mrs Ayoub's circumstances were not more unusual, uncommon or exceptional than those of any other person involved in bankruptcy.
Ms Pearce submitted that Mrs Ayoub's varicose veins and back condition were unfortunate, but did not constitute greater illness, injury or tragedy in relation to bankruptcy than normal.
In summary then, Ms Pearce submitted that I could not be convinced to the requisite standard that any of the above constituted "undue hardship" within the terms of regulation 16.10 of the Bankruptcy Regulations.
I considered the submissions of both parties in the context of regulation 16.10 of the Bankruptcy Regulations to decide whether to exercise the discretion to remit or waive all or part of the Official Trustee's fees, to consider whether the payment of the fee would impose "undue hardship" on Mrs Ayoub or whether because of "exceptional circumstances" it would be proper and reasonable to do so.
I was mindful that what was required by the Bankruptcy Regulations was something above and beyond the general hardship caused by the usual consequences of bankruptcy. There is no doubt that any person involved with bankruptcy experiences suffering and is in straitened circumstances.
I preferred the submissions of the Respondent in that regard to find that Mrs Ayoub is in a far better position than other persons involved in bankruptcy in that she has joint, if not ultimately full title to the house at Ermington.
I was mindful of the supportive family and extended family Mrs Ayoub has around her who have lent her money, and of her children, including Mr Charbel Ayoub, who has sought to assist her with this claim.
I have considered Mrs Ayoub's health situation of which I have little evidence before me, although I accepted that she had varicose veins, and was on disability support pension, and therefore assessed as unable to work at least for a certain time.
Ms Pearce submitted that the Applicant would not suffer hardship "above and beyond" the normal circumstances of bankruptcy, if the fees were not waived or remitted. In the Respondent's view the Applicant's claim on the basis of "undue hardship" had not been made out.
I noted that an error made by the Inspector-General or a personal tragedy such as injury or illness suffered by the Applicant, were examples of "hardship" "above and beyond" the normal circumstances of bankruptcy, but that I had no evidence of such error or personal tragedy with regard to Mrs Ayoub.
I noted that neither "undue hardship" nor "exceptional circumstances" are defined in the Bankruptcy Act or Regulations, and considered the cases of Stanley Faulkner v Inspector General in Bankruptcy (supra), Re Scott Pty Ltd and Minister for Primary Industries and Energy (1994) 35 ALD 157 and Re Teik Hok Lim and Department of Employment, Education and Training (1991) 22 ALD 201. In particular I noted that the principles established for "special circumstances" referred to also by Deputy President McMahon in Re ScottPty Ltd and Minister for Primary Industries and Energy (supra), were set out in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 and Beadle v Director-General of Social Security (1985) 7 ALD 670. I noted that in Beadle v Director-General of Social Security (1985) 7 ALD 670 at 674, the Full Court of the Federal Court, in examining "special circumstances" within the terms of section 102(1) of the Social Security Act 1947, (then current), said :
"It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given."
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 4, the Administrative Appeals Tribunal stated:
"The question is whether, when the relevant circumstances of the applicant are looked at in their entirety, they may fairly be described as unusual, uncommon or exceptional so as to warrant payment of the allowance earlier than the date from which it would ordinarily be paid."
This passage was affirmed by the Full Court of the Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670 at 675:
"While we would place less emphasis on one dictionary definition of 'special', we are in broad agreement with the approach of the Tribunal and are in agreement with its conclusion."
Applying the principles discussed in the case law cited above, and as found in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 4, and taking into account all of Mrs Ayoub's circumstances, I found that I was not reasonably satisfied that the hardship which Mrs Ayoub's suffers can be characterised as more "unusual, uncommon or exceptional" than that of any other person who has been through bankruptcy, and is living on a pension. I was not aware of any error committed by ITSA which would indicate that the discretion should be exercised. I did not have detailed information about any further illness, injury or tragedy in Mrs Ayoub's life which I have not already considered above.
Accordingly, although I acknowledge that Mrs Ayoub has experienced suffering, I do not find that she has suffered "undue hardship" within the terms of regulation 16.10 of the Bankruptcy Regulations or that because of other "exceptional circumstances", it would be proper or reasonable to remit or waive all or part of the Official Trustee's fees. I moved then to consider the discretion in section 283 of the Bankruptcy Act and decide whether in all the circumstances, the realisations charge should be remitted.
WHETHER THE DISCRETION PURSUANT TO SECTION 283 OF THE BANKRUPTCY ACT SHOULD BE EXERCISED TO REMIT THE REALISATIONS CHARGEThe realisations charge is made pursuant to the Bankruptcy (Estate Charges) Act 1997. As noted previously, ITSA has a discretion available to remit such charges pursuant to section 283 of the Bankruptcy Act, where failure to remit the amount would cause a person "hardship" and it is appropriate to remit the amount. Accordingly, standing in the shoes of the decision maker, this Tribunal has similar power.
I am mindful that the provisions with regard to hardship in the Bankruptcy Act differ from those in the Bankruptcy Regulations. In considering the tests in section 283 of the Bankruptcy Act, I must consider whether failure to remit the realisations charge would cause Mrs Ayoub "hardship", and whether it is appropriate to remit the charge.
I have noted the remarks of Deputy President Forrest as he then was, in Re Exell v Inspector-General in Bankruptcy (2000) 30 AAR 320, where the learned Deputy President found for Mrs Exell. In that case he held that failure to remit the realisations charge would cause Mrs Exell "hardship", and that it was accordingly appropriate, to remit the realisations charge. I was mindful of his view that the tests pursuant to regulation 16.10 of the Bankruptcy Regulations and section 283 of the Bankruptcy Act are different, noting that in section 283, the test is whether the failure to remit would cause the person "hardship" and whether it is appropriate to remit the charge, whereas the tests in regulation 16.10 specify "undue hardship" or "exceptional circumstances".
I noted that Deputy President Forrest referred to Rukat v Rukat [1975] Fam 63 at 73 where Lawton LJ said:
"The word "hardship" is not a word of art. It follows that it must be construed by the courts in a commonsense way, and the meaning which is put upon the word "hardship" should be such as would meet with the approval of ordinary sensible people. In my judgment, the ordinary sensible man would take the view that there are two aspects of "hardship" – that which the sufferer from the hardship thinks he is suffering and that which a reasonable bystander with knowledge of all the facts would think he was suffering."
Neither "hardship" in section 283 of the Bankruptcy Act nor "undue hardship" or "exceptional circumstances" in the Bankruptcy Regulations are defined, and in applying the law, I have considered the totality of the circumstances in Mrs Ayoub's case.
In coming to a decision, I was mindful that in Mrs Ayoub's case, the circumstances were considerably different from those of Mrs Exell. Although both had health problems, Mrs Exell had the care of her aged mother, and her only child lived interstate with her family and was in no position to assist her mother financially. By contrast, Mrs Ayoub has four children capable of working, and although she has some health problems, she is not caring for any aged relations and has an extended family who are able, and indeed have assisted her.
There is also no doubt that anyone involved, even peripherally with bankruptcy, and a person eligible for disability support pension has problems and suffers some hardship.
I have considered Mrs Ayoub's health, which I have discussed above. I have noted that her financial circumstances are better than those of the usual bankrupt in that she has a joint title in the house 4 Atkins Road, Ermington, New South Wales, and that she has supportive children and an extended family who have assisted her financially. I have no documentary evidence that the mortgage payments for the house are in arrears, or that Mrs Ayoub is repaying family members interest or their loans.
I have considered the totality of the circumstances before me, and thus whilst Mrs Ayoub may suffer hardship in paying the realisations charge, I do not find it appropriate pursuant to section 283 of the Bankruptcy Act, to remit the charge, and I decline to exercise the discretion to do so.
DECISIONThe Administrative Appeals Tribunal affirms the decision of the Inspector-General in Bankruptcy of the Insolvency and Trustee Service Australia ("ITSA"), dated 21 May 2001, refusing the application of Mrs Jeanette Ayoub, wife of bankrupt Mr Antonious Ayoub, that ITSA exercise a discretion pursuant to regulation 16.10 of the Bankruptcy Regulations 1996 to waive or remit the whole or part of the Official Trustee's fees, and pursuant to section 283 of the Bankruptcy Act 1966 that ITSA remit the realisations charge.
I certify that this and the 67 preceding paragraphs are a true copy of the decision and reasons for decision herein of Ms G Ettinger, Senior Member
Signed: .....................................................................................
AssociateDate/s of Hearing 11 March 2002
Date of Decision 17 June 2002ApplicantApplicant not present; represented by her son, Mr Charbel Ayoub
Solicitor for the Respondent Ms A Pearce (Australian Government Solicitor)
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