Charalambous v Robyn Erskine of Brooke Bird and Co - [2003] FMCA 352

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CHARALAMBOUS & ANOR v ROBYN ERSKINE OF BROOKE BIRD & CO & ANOR

[2003] FMCA 352

BANKRUPTCY – Filing of Statement of Affairs – declaration pursuant to s.30(1)(b) – time extended pursuant to s.33(1)(c) for filing pursuant to s.54(1) – not abridgment pursuant to s.149(3).

Bankruptcy Act 1966, ss.30(1)(b), 33(1)(c), 54(1), 149(3)

Re Van-Minnen; Ex P Harrison (Unreported FCA RD Nicholson J, 3 February 1999)
Nilant v Macchia (1997) 78 FCR 419; 148 ALR 329 (FC)
Re Rhode (1993) 42 FCR 149
Van-Minnen (nee Huson); Ex Parte Harrison Unreported 3 February 1999
Sofia v Pattison & Anor [1997] FCA 1586

Applicants:

GEORGE CHARALAMBOUS & CHRYSTALLA CHARALAMBOUS

First Respondent:

ROBYN ERSKINE OF BROOKE BIRD & CO (TRUSTEE)

Second Respondent:

INSOLVENCY & TRUSTEE SERVICES AUSTRALIA

File No:

MZ 156 of 2003

Delivered on:

20 August 2003

Delivered at:

Melbourne

Hearing Date:

23 April 2003

Judgment of:

McInnis FM

REPRESENTATION

Applicants:

In person

Solicitor for the First Respondent:

Mr T Irlicht

Solicitors for the First Respondent:

Irlicht & Broberg

Solicitors for the Second Respondent:

No appearance

ORDERS

It is declared pursuant to s.30(1)(b) of the Bankruptcy Act 1966 that George Charalambous and Chrystalla Charalambous filed with the Official Receiver a Statement of Affairs on 17 August 1999.
Pursuant to s.33(1)(c) of the Bankruptcy Act 1966 the time for the filing of the Statement of Affairs referred to in Order 1 hereof be extended to 17 August 1999.
The Applicants pay the First Respondent’s costs fixed in the sum of $125.00.
The Second Respondent is directed to record the date of filing of the Statement of Affairs of George Charalambous and Chrystalla Charalambous as 17 August 1999.
Liberty to apply is granted to the parties in relation to any matters arising out of these orders.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ 156 of 2003

GEORGE CHARALAMBOUS &
CHRYSTALLA CHARALAMBOUS

Applicants

And

ROBYN ERSKINE (OF BROOKE BIRD & CO) (TRUSTEE)

First Respondent

And

INSOLVENCY & TRUSTEE SERVICES AUSTRALIA

Second Respondent

REASONS FOR JUDGMENT

George Charalambous and Chrystalla Charalambous (the Applicants) by an application filed 20 February 2003 seek orders from the Court to permit the Insolvency & Trustee Services Australia (ITSA) to register or record an earlier date of lodgment of the original Statement of Affairs for both Applicants. The earlier lodging of the original Statement of Affairs is claimed to be “for the purposes of the Bankruptcy Act 1966 as amended”. When the application was filed on 20 February 2003 it was accompanied by an affidavit purportedly sworn by George Georgiou Charalambous (the First Applicant) and an affidavit purportedly sworn by Chrystalla Georgiou Charalambous (the Second Applicant).
The main thrust of the application is based upon the belief that if the Court were to make an order directing that the lodgment of the Statement of Affairs should be recorded as 20 August 1999 (despite reference to 17 August in the affidavit material) then allowing for the time period set out in s.149 of the Bankruptcy Act 1966 (the Bankruptcy Act) the Applicants would both be discharged at the end of a three year period from August 1999. This would effectively mean discharge following order of the Court retrospectively to August 2002. It is understood that there is no evidence of a Statement of Affairs being lodged with the Official Trustee. It is acknowledged by the First Respondent that the Statement of Affairs of both Applicants had been received on 17 August 1999. There is no record of each statement being lodged with ITSA at or around that time.
Unfortunately both affidavits were defective in that the particulars of jurat did not reveal the precise date upon which each affidavit was sworn but instead simply referred to both being sworn in February 2003.
When the matter was first listed before the Court on 31 March 2003 the Court made orders that the application be adjourned and the Applicants were granted leave to amend the name of the First Respondent by deleting what appeared on the application namely “Brook Bird & Co (Trustee)” and inserting “Robyn Erskine (of Brook Bird & Co) (Trustee)” in lieu thereof. The Applicants were granted leave to file and serve re-sworn affidavits in support of the application together with any further affidavit material to be relied upon. At that first hearing Mr Ennis appeared on behalf of the ITSA.
When the matter came before the Court on 23 April 2003 the Applicants appeared in person and as on the first Court date were assisted by an accountant friend who the Court permitted to be present effectively as a McKenzie friend. Unfortunately without appropriate legal training or knowledge the McKenzie friend, the application as drafted and indeed the supporting material has been less than helpful to the Court.
Nevertheless the Applicants have managed to re-swear the affidavits and in the circumstances the Court was prepared to permit each to rely upon the affidavits re-sworn on 3 April 2003. Although purporting to be re-sworn the affidavits in fact contained additional material which did not appear in the original affidavits which had incomplete particulars of jurat.
It is appropriate to set out the content of the affidavit of the First Applicant sworn 3 April 2003 which is almost identical to the affidavit of the Second Applicant sworn the same day. In his affidavit the First Applicant states:
“1.That I was made Bankrupt by a Sequestration Order on

6 July 1999 (refer attached Annexure Marked G1) and I was notified by the Trustee (Robyn Erskine) on 20/7/99 (Per Annexure Marked G2).
2.That a statement of affairs dated 16/8/99 (Per attached Statement SA/G1) was prepared in triplicate by my solicitor Mr Von Kelly. One copy was given to the Trustee on 17/8/99, one kept by me, and one forwarded to ‘ITSA’ Insolvency & Trustee Services Australia on or about 17/8/99.”
Exhibit “G1” is a copy of a sealed order entered 6 July 1999 by a Registrar against the First Applicant though it is noted the Sequestration Order in identical terms was made against the Second Applicant with the date of act of bankruptcy for both Applicants being 21 December 1998.
Exhibit “G2” is a copy letter dated 20 July 1999 to the First Applicant. Again, an identical letter has been exhibited in relation to the Second Applicant. Each letter addressed to the Applicants was forwarded by Robyn Erskine, Trustee, of Brooke Bird & Co and refers to the fact that each of the Applicants had been made bankrupt by a Sequestration Order on 6 July 1999. Each of the Applicants was required pursuant to s.54 of the Bankruptcy Act 1966 within 14 days of receipt of the notice to make out and file with the Official Receiver a Statement of Affairs and to furnish a copy of the Statement of Affairs to Ms Erskine.
In the affidavit reference is made to a Statement of Affairs of each of the Applicants. The Statement of Affairs of the First Respondent is dated 16 August 1999 and the Statement of Affairs of the Second Respondent is dated 13 August 1999.
When the application was heard on 23 April 2003 Mr T Irlicht appeared for the First Respondent and there was no appearance for the Second Respondent. The First Respondent had also provided by letter dated 10 April 2003 the following information which the Court received:-
“I advise that I was appointed as Trustee of the above bankrupt estate on 6 July 1999.
I advise that I received the bankrupt’s application on 4 April 2003 to the Federal Magistrates Court of Australia seeking an order to direct the Insolvency & Trustee Service Australia to register and record an earlier date of lodgment of their Statement of Affairs.
I advise that I have no objection to the above application and unless required I do not propose to attend the hearing scheduled for 23 April 2003 at 10 am.”
Mr Irlicht as stated appeared for and on behalf of the Trustee. In my view the attendance of a representative of the Trustee in matters of this kind is both appropriate and helpful to the Court. In fact Mr Irlicht was able to at least endeavour to characterise the nature of this application as being an application seeking relief under s.30(1) of the Bankruptcy Act. That section provides:-
“ General powers of Courts in bankruptcy
30(1) The Court:
(a) has full power to decide all questions, whether or law or of fact, in any case of bankruptcy or any matter under Part VIIII, V or VI coming within the cognizance of the Court; and
(b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.”
Other relevant legislation includes the following:-
“33(1) The Court may:
(a)upon such terms as it thinks fit, at any time adjourn any proceeding before it, either to a fixed date or generally;
(b) at any time allow the amendment of any written process, proceeding or notice under this Act; or
(c)extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time.
54(1) Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he or she is notified of the bankruptcy:
(a)make out and file with the Official Receiver for the District in which the sequestration order was made a statement of his or her affairs; and
(b)furnish a copy of the statement to the trustee.
Penalty: 5 penalty units.
…
149(4) If the bankrupt becomes a bankrupt after the commencement of section 27 of the Bankruptcy Amendment Act 1991 , the bankrupt is discharged at the end of the period of 3 years from the date on which the bankrupt filed his or her statement of affairs.”
Mr Irlicht referred the Court to the decision of Re Van-Minnen; Ex P Harrison (Unreported FCA RD Nicholson J 3 February 1999). In that case His Honour considered the Full Court of the Federal Court’s decision in Nilant v Macchia (1997) 78 FCR 419; 148 ALR 329 (FC) which it said overruled in part the case of Re Rhode (1993) 42 FCR 149.
Reference was also made by Mr Irlicht to the unreported decision of Nicholson J in the matter of Van-Minnen (nee Huson); Ex Parte Harrison Unreported 3 February 1999). That case referred to orders sought seeking to have a Statement of Affairs filed with the Trustee to be recognised for the purpose of s.54 of the Bankruptcy Act and that the time limit be abridged to a date after the date of filing the statement with the Trustee.
Mr Irlicht referred me to a passage from McDonald Henry & Meek, Australian Bankruptcy Law and Practice where at paragraph 149.3.05 the learned authors state,
“The Court cannot exercise its jurisdiction under s.33(1)(c) … to ‘abridge’ the time provided for in s.149(3) … even in a case where the Statement of Affairs was not filed on time by mistake, or through no fault of the debtors because the time after which a bankrupt is automatically discharged under s.149(3) … is the time after which something happens by law, not the time ‘for doing any act or thing’: Nilant v Macchia (1997) 78 FCR 419; 148 ALR 329 (FC) overruling in part re Rhode (1993) 43 FCR 149. A declaration under s.30(1)(b) can not have the effect of achieving through the back door what the Full Court has said is not available through s.33(1)(c) in circumstances where the possibility of such a declaration was clearly before the Full Court; re Van-Minnen; Ex Parte Harrison (Unreported FCR R D Nicholson J, 3 February 1999)”
In the Van-Minnen case Nicholson J referred to the authorities set out in the extract from McDonald Henry & Meek. It is important however before referring further to that judgment of Nicholson J to set out the background to that application stated by Nicholson J as follows:
“The Statement of Affairs which the Applicant wishes to have recognised as being filed with the Registrar in Bankruptcy on 23 October 1995 was given to her Trustee on that date. The Applicant’s Trustee has filed an affidavit in support of this application. The Trustee states that he believed that the statement had been filed with the Registrar in Bankruptcy at the same time as it was given to him. The Registrar in Bankruptcy did not receive the statement at that time. On 13 September 1996 he wrote to the Trustee requesting the statement. The Trustee states in his affidavit that the statement was filed at the registry on 19 September 1996.”
It will be seen from those facts that what the Applicant sought by way of order of Nicholson J was to have recognised the Statement of Affairs given to the Trustees on 23 October 1995 as having effectively been filed at the registry of the office of the Official Receiver on that date rather than the date deposed to by the Trustee as being

19 September 1996. As in the present case the time period is significant though I should add in the present case there is no date asserted as being a date upon which the Statement of Affairs was filed with the Official Receiver and hence time has not commenced pursuant to s.54.
After considering the relevant legislation Nicholson J in the Van-Minnen case states the following:
“7 The Court cannot exercise its jurisdiction under par 33(1)(c) to "abridge" the time provided for in subs 149(3). That subsection is applicable to a bankrupt who became such before the commencement of s 27 Bankruptcy Amendment Act 1991 (Cth) and also provides for discharge at the end of the period of three years from the date on which the bankrupt filed his or her statement of affairs. This is the case even where the statement of affairs was not filed on time by mistake or through no fault of the debtors. It was so held in Nilant v Macchia (1997) 148 ALR 329 on the ground that the time after which a bankrupt is automatically discharged under subs 149(3) is the time after which something happens by law, not the time "for doing any act or thing" being the words relevantly used in par 33(1)(c). In so holding the Full Court in Nilant (Spender, Carr and Finn JJ) overruled on that point the decision in Re Rhode (1993) 42 FCR 149, which had been followed in a number of cases described in Nilant at 427.
8 It is incontestable that the decision in Nilant is applicable also to the utilisation of par 33(1)(c) in relation to subs 149(4).
9 In Re Rhode Burchett J also granted a declaration under par 30(1)(b) of the Act to the effect that the bankrupt's filing of her statement of affairs was an effective filing for the purposes of subs 149(3)(a). That aspect was not the subject of consideration in the ratio of the Full Court in Nilant. The question arises whether in this matter the Court could make a declaration pursuant to s 30(1)(b) to the effect that the Statement was effectively filed for the purposes of subs 149(4) of the Act.
10In allowing the appeal in Nilant the Full Court recognised the injustice which resulted and said at 428:
"We also agree, respectfully, with Burchett J that this situation ought to be looked at by those responsible for amending the Act. It is unlikely that Parliament, in introducing the new regime now found in Pt VII of the Act, intended a statutory framework so rigid as to be unfair in particular circumstances. In our view, it would work an injustice in factual situations (such as those in Rhode and the significant number of cases which followed that decision) where there is a reasonable excuse for a bankrupt not filing his or her statement of affairs within time. It is not a complete response to point to subdiv B of Div 3 of Pt VII as providing a means of application for early discharge. Eligibility under that subdivision is very restricted.
The result is that, in our opinion, the present matter has proceeded on an assumption which did not have a secure legal foundation. We will order that the matter be remitted to the learned trial judge for further consideration. It may be that some other basis can be advanced ( apart from s33 (1)(c)) for treating one or other of the statements of affairs filed by the respondent as having been duly filed in accordance with the Act." (Emphasis added).
11 Parliament not having amended the Act, unless a basis other than s33(1)(c) is found for achieving the same result, the Act would continue to work an injustice, this time in relation to the present applicant.
12 I am not satisfied that exercise by the Court of the declaratory power in s 30(1)(b) constitutes an "other basis" for resolving the issue, to which the Full Court made reference in the second paragraph in the preceding quotation. It is the case that s 30(1)(b) gives the Court wide powers: Re Ellis; Ex parte Jefferson (Drummond J, unreported, 17 February 1995). However the making of such a declaration could not have the legal effect of achieving through the back door what the Full Court has said is not available through s 33(1)(c) in circumstances where the possibility of such a declaration was clearly before the Full Court. The circumstances here are also entirely distinguishable from those in Sofia v Pattison and Official Receiver (NSW) (Finkelstein J, unreported, 20 October 1997) where copy statements were left on the counter of the Registry, as distinguished from filed with the Trustee.”
I have deliberately set out the full extract from the decision of Nicholson J and note that His Honour refers to the circumstances in that case being distinguishable from those in the decision of

Finkelstein J in Sofia v Pattison & Anor [1997] FCA 1586. In the Sofia case the Court made a declaration that Statements of Affairs should be treated as having been regularly filed. It did so after a finding that no injustice would result from the fact that each Applicant had filed a copy Statement of Affairs rather than the original statement. The Court in that case made an order extending the time fixed by s.54(1) for the filing of the Statement of Affairs and found that it had power to make that order under s.33(1)(c).
In the Van-Minnen case it should be noted that there was no record of the filing of the Statement of Affairs but rather affidavit evidence in support of the application by the Trustee stating that he believed the Statement of Affairs had been filed with the Registrar in Bankruptcy at the same time that it had been given to him. Presumably the Registrar in Bankruptcy had provided evidence to the Court that he had not received the Statement of Affairs at the time alleged by the Trustee and certainly there was evidence that on a later date namely 13 September 1996 he had written to the Trustee requesting the Statement of Affairs. It was then filed on 19 September 1996. In the present case there is no evidence of a Statement of Affairs being received by the Official Receiver pursuant to s.54 of the Bankruptcy Act. However there is affidavit evidence as indicated earlier from both Applicants who depose that the Statement of Affairs had been “forwarded to ITSA … on or about 17/8/99”.
Based upon the affidavit evidence of the Applicants I am prepared to make a declaration pursuant to s.30(1)(b) that each of the Applicants had filed a Statement of Affairs with the Second Respondent on 17 August 1999. Having made that declaration I am satisfied that in the present case the Court does have power to then further make an order extending the time fixed by s.54(1) of the Act for the filing of the Statement of Affairs until 17 August 1999. It is noted that both the Applicants had been the subject of a sequestration order on 6 July 1999. The power to extend the time, albeit retrospectively, for the filing of the Statement of Affairs in my view is consistent with the decision of Finkelstein J in the Sofia decision is made under s.33(1)(c) of the Bankruptcy Act. I do not regard that decision as being an exercise of the discretion in the present circumstances to effectively abridge time provided for in s.149(3) of the Bankruptcy Act. It may be a consequence that the automatic discharge now occurs with a degree of certainty but I do not regard my decision as having the effect of in any way abridging time. Instead by making the declaration under s.30(1)(b) and extending time under s.33(1)(c) for compliance with the requirements under s.54(1) of the Bankruptcy Act, I am doing no more than exercising the general powers which the Court undoubtedly has in deciding all questions whether law or fact in any case of bankruptcy coming within the cognisance of the Court pursuant to s.30(1) of the Act. I will make orders accordingly.

I should add that during the course of the hearing Mr Irlicht who appeared for the First Respondent sought an order that the First Respondent’s costs be paid by the Applicant and the costs sought was a nominal amount of $125.00. In the circumstances where the Court is assisted by the attendance of a representative for and on behalf of the First Respondent and the Applicants are seeking orders for their benefit in order to establish a degree of certainty which is a desirable outcome both for the Applicants and for the administration of the Bankruptcy Act, I can see no reason why the First Respondent should not be awarded nominal costs which are fixed in the sum of $125.00.
The orders of the Court are as follows:-
(1)It is declared pursuant to s.30(1)(b) of the Bankruptcy Act 1966 that George Charalambous and Chrystalla Charalambous filed with the Official Receiver a Statement of Affairs on 17 August 1999.
(2)Pursuant to s.33(1)(c) of the Bankruptcy Act 1966 the time for the filing of the Statement of Affairs referred to in Order 1 hereof be extended to 17 August 1999.
(3)The Applicants pay the First Respondent’s costs fixed in the sum of $125.00.
(4)The Second Respondent is directed to record the date of filing of the Statement of Affairs of George Charalamabous and Chrystalla Charalambous as 17 August 1999.
It is expected that the outcome of these orders would be that s.149 of the Bankruptcy Act would apply so that both Applicants should be automatically discharged at the end of the three year period from

17 August 1999 which is the date now declared to be the date of filing of the Statement of Affairs for each of the Applicants. In the event that any difficulties arise in relation to the orders herein I grant liberty to the parties to apply to the Court for further orders and/or declarations.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 20 August 2003