Chamberlain (Trustee) v Tilbrook

Case [2017] FCA 1586

FEDERAL COURT OF AUSTRALIA

Chamberlain (Trustee) v Tilbrook [2017] FCA 1586

File number: NSD 1039 of 2017
Judge: FLICK J
Date of judgment: 19 December 2017
Catchwords: BANKRUPTCY AND INSOLVENCY – where notice given by Official Receiver pursuant to s 139ZQ of the Bankruptcy Act 1966 (Cth) – where trustee sought recovery of moneys or property as a result of void transaction – where trustee sought recovery of debt stated in notice given by Official Receiver – where non-compliance with notice – where no Defence filed – where no appearance for respondent – judgment entered  
Legislation:

Bankruptcy Act1966 (Cth) ss 120, 121, 139K, 139ZQ, 139ZS, 139ZT

Federal Court of Australia Act 1976 (Cth) ss 51A, 52

Federal Court Rules2011 (Cth) rr 5.22, 10.24, 16.07

Cases cited:

Combis (Trustee) v Spottiswood (No 2) [2013] FCA 240, (2013) 11 ABC(NS) 407

Halse v Norton (1997) 76 FCR 389

Official Trustee in BankruptcyvLopatinsky [2003] FCAFC 109, (2003) 129 FCR 234

Re Aley; Ex parte Sweeney v Aley (1996) 63 FCR 294

Re McLernon; Ex parte SWF Hoists and Industrial Equipment Pty Ltd v Prebble (1995) 58 FCR 391

Re Rose; Godfrey v Whitton [2006] FCA 823

Sampson (Trustee) v Taboada [2017] FCA 79

Vale v Sutherland [2009] HCA 26, (2009) 237 CLR 638

Date of hearing: 28 November and 19 December 2017
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 38
Counsel for the Applicant: Ms A Lyons
Solicitor for the Applicant: TressCox Lawyers
Counsel for the Respondent: The Respondent did not appear

ORDERS

NSD 1039 of 2017
BETWEEN:

CHRISTOPHER MEL CHAMBERLAIN AS TRUSTEE OF THE BANKRUPT ESTATE OF MALCOLM JOHN TILBROOK

Applicant
AND:

PATRICIA SUSAN TILBROOK

Respondent

JUDGE:

FLICK J

DATE OF ORDER:

19 DECEMBER 2017

THE COURT ORDERS THAT:

1.Judgment be entered in favour of the Applicant as against the Respondent in the sum of $339,725.09 pursuant to s 139ZQ(8) of the Bankruptcy Act1966 (Cth).

2.The Respondent is to pay interest on the sum of $339,725.09 from 28 October 2015 up to and including 19 December 2017 pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

3.The Respondent is to pay interest on the judgment sum pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth).

4.The Respondent is to pay the Applicant’s costs of the proceedings.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

  1. The progression of this case to hearing has not proved easy.

  2. The proceeding commenced with the filing of an Originating Application on 28 June 2017.  It was accompanied by a Statement of Claim.  The Applicant in the proceeding was Mr Christopher Mel Chamberlain as Trustee (the “Trustee”) of the Bankrupt Estate of Mr Malcolm John Tilbrook.   The Respondent to the proceeding was Ms Patricia Susan Tilbrook.  She is the wife of Mr Malcolm…

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Details
AGLC
Chamberlain (Trustee) v Tilbrook [2017] FCA 1586
Case
[2017] FCA 1586
Decision Date

CaseChat Overview and Summary

The case of Chamberlain (Trustee) v Tilbrook involved the Official Trustee, Christopher Mel Chamberlain, as the plaintiff and Patricia Susan Tilbrook as the defendant. The dispute arose from a claim by the Official Trustee for the recovery of a debt from Patricia Tilbrook, following the bankruptcy of her husband, Malcolm John Tilbrook. The proceedings were initiated under section 139ZQ of the Bankruptcy Act 1966 (Cth), which empowers the Official Trustee to demand repayment of certain voidable transactions. The trustee sought to recover a debt of $339,725.09, which was alleged to have been improperly transferred by Malcolm John Tilbrook to the defendant, Patricia, prior to his bankruptcy.

The central legal issue in this case was whether the transaction, as detailed in the notice given by the Official Receiver, constituted a voidable transaction under the Bankruptcy Act. The court was required to determine if the transfer of funds from a joint bank account to a third party, which was used to purchase a business, was a voidable transaction under the Act. The notice issued under s 139ZQ outlined the basis for the claim, including the contention that the transaction was void as it occurred within five years of the bankruptcy and did not represent fair consideration. The court had to consider the failure of the defendant to respond to the notice and the absence of any defense, which led to the presumption of the truth of the statements made in the notice.

The court found in favour of the Official Trustee, noting that the defendant had failed to respond to the notice or appear in the proceedings, which resulted in the allegations of fact being deemed admitted. The court concluded that the transaction was indeed voidable under the Bankruptcy Act, as it did not represent fair consideration and occurred within the five-year period before the bankruptcy. The non-compliance with the notice, which is a criminal offence under the Act, further supported the trustee's claim. Consequently, judgment was entered in favour of the Official Trustee, requiring the defendant to repay the sum of $339,725.09, along with interest and costs.

In summary, the court upheld the claim for the recovery of the voidable transaction, ordering the defendant to repay the specified amount, including interest and costs. The decision underscores the importance of compliance with notices issued under the Bankruptcy Act and the consequences of failing to respond to such notices.

Orders

Orders of the court

1. Judgment be entered in favour of the Applicant as against the Respondent in the sum of $339,725.09 pursuant to s 139ZQ(8) of the Bankruptcy Act 1966 (Cth).

2. The Respondent is to pay interest on the sum of $339,725.09 from 28 October 2015 up to and including 19 December 2017 pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).

3. The Respondent is to pay interest on the judgment sum pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth).

4. The Respondent is to pay the Applicant’s costs of the proceedings.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Finally, non-compliance with a notice under s 139ZQ constitutes a criminal offence: s 139ZT. See: Official Trustee in BankruptcyvLopatinsky [2003] FCAFC 109 at [150], (2003) 129 FCR 234 at 256 per Whitlam and Jacobson JJ The material facts pleaded & the notice given Turning to the material facts pleaded and the notice given. Other than the evidence in respect to the primary basis upon which the Court was invited to proceed to enter judgment was the statement of material facts set forth in the Amended Statement of Claim and the absence of any Defence having been filed. The Statement of Claim as amended, in its entirety, was expressed as follows:1.On 8 February 2011, Malcolm John Tilbrook became bankrupt when his debtors’ petition was accepted by the Official Receiver.2.On 8 February 2011, the Applicant, Christopher Mel Chamberlain, was appointed Trustee of the bankrupt estate of Malcolm John Tilbrook.3.The Respondent, Patricia Susan Tilbrook, is the spouse of Malcolm John Tilbrook.4.On 10 July 2015, the Official Receiver issued a Notice pursuant to section 139ZQ of the Bankruptcy Act 1966 (Cth) (Notice) to the Respondent demanding payment of the sum of $339,725.09 within 28 days of receipt of the Notice.ParticularsThe Notice is in writing dated 10 July 20155.On 28 October 2015, the Respondent was personally served with the Notice.6.The Respondent has failed to comply with the Notice.7.By reason of the facts, matters and circumstances set out in paragraphs 4, 5 and 6, and pursuant to section 139ZQ(8) of the Bankruptcy Act 1966 (Cth) the Respondent is indebted to the Applicant in the amount of $338,725.09. In the absence of a Defence being filed, each of the allegations of fact set forth in the Statement of Claim “are taken to be admitted”: Federal Court Rules r 16.07(2). Further to the statement of material facts set forth in the Amended Statement of Claim, it should be noted that the notice issued pursuant to s 139ZQ and as identified in the Particulars to para [4] set forth the basis upon which it was contended that the transaction relied upon was “void” as follows: 4.2 Transfer of Moniesi.On 1 December 2005 the Debtor inherited his late mother’s property situated 9 King Edward Street, Roseville (‘the Property’) pursuant to probate number 112562/05 granted on 17th August 2005.ii.On 14 November 2008 the Debtor sold the Property for $1,850,000.00.iii.The bank account statement for the St George Freedom Cheque Account (Account Number: 112-879 061199463) (‘the Bank Account’) held jointly by you and the Debtor show thatŸOn 14 November 2008 a cheque for amount $314,625.26 representing the total net equity from the sale of the Property was deposited into the Bank Account; andŸOn 25 November 2008 a further deposit of two cheques of amount $106,397.18 and $2,370 respectively (totalling $108,767.18- representing the balancing deposit monies from the sale of the Property) was made into the Bank Account.iv.On 23 September 2008 a Company styled Mosman Health Foods Pty Ltd (ACN 133 390 664) (‘the Company’) was incorporated. The historical search of the Company records:ŸYou as the former director;ŸMr Peter John Morris as a former Member of the Company.v.The copy of an email dated 28 June 2012, from Mr Peter John Morris records that his shareholding in the Company was held beneficially for you due to his firm, Peter Morris & Co incurring costs for the incorporation of the Company.vi.The contract for the sale of business filed in the Office of State Revenue disclose that on or about 27 November 2008 the Company purchased the Mosman Good Health Food Store (‘the Business’) for consideration of $310,000.00.vii.On 9 December 2008 a cheque for $339,725.09 was drawn from the Bank Account in favour of Relate Holdings Pty Ltd which was used to purchase the Business.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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