Barnden as trustee of the Bankrupt Estate of Stein v Stein

[2017] FCCA 3041

FEDERAL CIRCUIT COURT OF AUSTRALIA

BARNDEN AS TRUSTEE OF THE BANKRUPT ESTATE OF STEIN v STEIN [2017] FCCA 3041

Catchwords:
BANKRUPTCY – Application for order under s.146 of the Bankruptcy Act 1966 (Cth) (Act) that the distribution of dividends proceed as if bankrupt had filed a statement of affairs as required by the Act – application granted.

Legislation:

Bankruptcy Act 1966, s.146

Cases cited:
Official Trustee in Bankruptcy; in the matter of Shaw [1999] FCA 968
Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649
Roufeil (Trustee), in the matter of Jarvie (Bankrupt) [2015] FCA 232

Applicant: ANDREW JAMES BARNDEN AS TRUSTEE OF THE BANKRUPT ESTATE OF BRONWYN MARY STEIN

Respondent: BRONWYN MARY STEIN

File Number: SYG 3209 of 2017

Judgment of: Judge Manousaridis

Hearing date: 29 November 2017

Date of Last Submission: 29 November 2017

Delivered at: Sydney

Delivered on: 29 November 2017

REPRESENTATION

Solicitors for the Applicant: Mr R Roser of Roser Lawyers

No appearance by or on behalf of the respondent

ORDERS

1. Subject to order 4 pursuant to s.146 of the Bankruptcy Act 1966 (Cth) the applicant as trustee of the bankrupt estate of Bronwyn Mary Stein distribute dividends amongst the creditors of Bronwyn Mary Stein who have proved their debts in accordance with Division 5 of the Bankruptcy Act 1966 (Cth) as if Bronwyn Mary Stein had filed a statement of her affairs and those creditors had been stated to be creditors in it.

2. The distribution authorised by order 1 not be effected before 20 December 2017.

3. The costs of the application be costs of the bankrupt estate and be paid from the bankrupt estate.

4. Bronwyn Mary Stein and any creditor have liberty to apply to discharge orders 1, 2 and 3, such liberty to be exercised by making an application by no later than 20 December 2017.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3209 of 2017

ANDREW JAMES BARNDEN AS TRUSTEE OF THE BANKRUPT ESTATE OF BRONWYN MARY STEIN

Applicant

And

BRONWYN MARY STEIN

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

1. The trustee of the estate of Bronwyn Mary Stein applies for an order under s.146 of the Bankruptcy Act 1966 (Cth) (Act), which provides:

   Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the Court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division 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. The trustee was appointed trustee in bankruptcy of the estate of Ms Stein as a result of a sequestration order made by this Court on 19 July 2016. 

3. The application that is before me was filed on 17 October 2017.  The application was given a first return date on 30 October 2017, but I am informed, and this is common knowledge, that at that time the Law Courts Building, where the courtroom to which the application was made returnable is located, was unavailable to the public because of flooding.  In any event, the matter was given a listing before a Registrar on 6 November 2017.  On that day there was no appearance by Ms Stein or anyone on her behalf.  That is not surprising because I am informed that by that stage the application had not been served on Ms Stein.  On that day the Registrar made directions which included a direction the matter be listed before me at 9.30 am on 29 November 2017.  The trustee, being the applicant, was also directed to notify the parties that did not appear of the details of the time, date and place of the listing before me. 

4. On 21 November 2017 the application was personally served on Ms Stein.  Although served on 21 November 2017, what was served was a letter dated 18 October 2017 from the trustee’s solicitor noting that the matter was listed for directions on 30 October 2017.  By the time these documents were served, that information was obviously not current. 

5. On 22 November 2017 the trustee’s solicitor sent to Ms Stein a letter by express post attaching a copy of the orders made on 6 November 2017. On that day, namely 22 November 2017, a letter was also sent by email to each of the creditors that the trustee had identified and who had lodged a proof of debt attaching a letter stating that the trustee has made an application to this Court for orders under s.146 of the Act. The letter further stated that the matter was listed for directions before me at 9.30 am on 29 November 2017. The letter also stated, however, that despite the matter being listed for directions before me, the trustee would be seeking to proceed to hearing and obtain orders on a final basis. That is in fact what the trustee has sought to do today.

6. As I just noted, a letter dated 22 November 2017 was sent to Ms Stein by express post, and I should set out what that letter states.  It refers to the matter being listed before me at 9.30 am on 29 November 2017.  It attached the orders made by the Registrar on 6 November 2017, and stated “we will be seeking for this matter to be heard on a final basis on 29 November 2017”.   I should also mention that the trustee has read an affidavit by Ms Hawke, who is a solicitor employed by the solicitor for the trustee, who deposes to a conversation on 28 November 2017, at approximately 2.20 pm she had with Mr Jason Stein, who appears to be Ms Stein’s husband. I do not need to set out the contents of that affidavit.  But it indicates that at least Mr Stein and, I infer, Ms Stein both are aware that the matter was before me today.  Mr Stein indicated that Ms Stein would provide a statement of affairs, but that has not eventuated. 

7. Mr Roser, who appeared for the trustee, applies for the making of orders on a final basis. I am satisfied that it is appropriate that I at least deal with the matter on final basis. I am satisfied, even though, on the evidence that I have just recited, there has not been a great amount of notice given to Ms Stein. I propose to deal with that complication, if I am otherwise satisfied that it is appropriate, to make an order under s.146 of the Act ,by providing that the order not come into effect until some further time, and reserving liberty to Ms Stein to apply to set aside any order I might make.

8. That, then, leads me to the substantive issues that are raised on this application. Mr Roser has provided written submissions, which refer to the effect of the evidence that has been filed and which I have read, and also to the relevant principles that should guide me in determining whether to make an order under s.146 of the Act. In particular the submissions refer to the judgment of Gleeson J in Roufeil (Trustee), in the matter of Jarvie (Bankrupt)[1], where her Honour stated that there were two issues in relation to s.146 of the Act that need to be determined. These were, first, whether the bankrupt has failed to file a statement of affairs as required by the Act and, second, assuming that is answered in the affirmative, whether the Court in the exercise of its discretion should order distribution of dividends among the creditors that have provided a proof of debt.

   [1] [2015] FCA 232

9. The evidence satisfies me that commencing on or about 22 July 2016 the trustee on a number of occasions requested Ms Stein complete and send to the trustee a statement of affairs and that despite those requests Ms Stein failed to do so. I am also satisfied that, particularly given the time that has passed and notwithstanding what Ms Stein’s husband said to Ms Hawke yesterday, there is no prospect that Ms Stein will provide a statement of affairs. That means that the precondition for the exercise of the discretion conferred by s.146 of the Act is satisfied.

10. Section 146 of the Act “is intended to facilitate the distribution of dividends among the creditors of the bankrupt in circumstances where the trustee has not had the benefit of a statement of affairs prepared by the bankrupt”.[2]. The purpose of s.146 of the Act is “to give the Court the means of ensuring that the absence of a statement of affairs does not prejudice those with an interest in the bankrupt’s affairs”.[3] Relevant factors to the exercise of the discretion conferred by s.146 of the Act include whether the creditors have been notified of the application and have had the opportunity to be heard, and whether the trustee has taken steps to ascertain whether there are creditors other than those who have come to the trustee’s attention by filing a proof of debt.

    [2] Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649 at 14

    [3] Official Trustee in Bankruptcy; in the matter of Shaw [1999] FCA 968

11. The evidence reveals, and I am satisfied that, the trustee has identified four creditors that have filed proofs of debt which have been accepted.  The trustee has also placed an advertisement in “The Australian” newspaper on 18 September 2017 as a result of which no further creditors have appeared. I am also satisfied that the trustee by 21 November 2017 informed each of the creditors, of which the trustee is aware, of today’s application.  In those circumstances I am satisfied that the trustee has undertaken all reasonable steps to ascertain the identity of the creditors of Ms Stein and the trustee has given to those creditors whom he has identified reasonable notice of his intention to apply for the orders the trustee seeks in this application. 

12. I am otherwise satisfied that I should make an order under s.146 of the Act, but intend to frame the order so that the distribution which will be authorised by the order will not take effect for 14 days from the date of the order. I also intend to reserve liberty to apply for the respondent or anyone else to apply to discharge that order.[4]

    [4] After further discussion I ordered that the orders I proposed to make under s.146 of the Act not take effect until 20 December 2017.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 8 December 2017