Combe and Inspector-General in Bankruptcy

[2004] AATA 1324

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1324

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/347

GENERAL ADMINISTRATIVE DIVISION		)
Re		FAYE DIANE COMBE

Applicant

And INSPECTOR-GENERAL IN BANKRUPTCY

Respondent

DECISION

Tribunal Ms N Bell, Senior Member

Date13 December 2004

PlaceSydney

Decision The decision under review is affirmed.

......................................

Ms N Bell  Senior Member

BANKRUPTCY – Objections to Discharge of Bankruptcy – Failure to Provide Information – Special Ground – Whether Reasons for Failure Reasonable

Bankruptcy Act 1966

REASONS FOR DECISION

13 December 2004 Ms N Bell, Senior Member

1.      Ms Combe was made bankrupt on 15 October 2002.  Mr Scott Pascoe was appointed trustee of the bankrupt estate.  The petitioning creditor was Anthony Ziade, solicitor, whose claim continues to be the subject of dispute by Ms Combe.

2.      In the normal course, Ms Combe would be discharged from bankruptcy on 16 October 2005.  However, in October 2003, the trustee filed three objections to discharge.  The effect of a Notice of Objection is to extend the period of bankruptcy.

3.      Ms Combe applied to the Inspector-General of Bankruptcy to review the decision to file objections and two of the three objections were cancelled by the Inspector-General.  The remaining objection was confirmed by the Inspector-General.  It is that decision by the Inspector-General of bankruptcy that is under review in this application.

4. The objection was made by the trustee on 23 October 2003 on the grounds that Ms Combe failed to provide information pursuant to section 149D(1)(d) of the Bankruptcy Act 1966 (“the Act”).  In particular, the trustee contended that when requested in writing by the trustee to provide written information about her property, income or expected income, Ms Combe failed to comply with the request.

5. Section 149D(1)(d) of the Act includes, as a ground on which a Notice of Objection may be lodged, a failure by the bankrupt, when requested by the trustee in writing, to provide written information about the bankrupt property, income or expected income. Section 149N(1A) designates this ground as a “special ground” and provides that an objection made on a special ground must not be cancelled if there is sufficient evidence to support the existence of at least one special ground specified in the objection and the bankrupt fails to establish that he or she had a reasonable excuse for the conduct or failure that constitutes the special ground.

6.      It is clear that the Notice of Objection lodged by the trustee specifies a special ground.

7.      The issues for me to consider are therefore whether there is evidence to support special ground and whether Ms Combe has a reasonable excuse.

8.      The following facts are not in dispute:

·The trustee wrote to Ms Combe on 22 November 2002 requesting her to provide:

“All documentation (which includes correspondence), in your possession relating to the house property in which you reside. In particular I require the following:

1.    any documents completed, but not lodged, to arrange the transfer of the house property pursuant to Family Court Orders;

2.    any documentation in relation to mortgages registered against the house property by Starr-Bowkett and ANZ Bank; and

3.    the Certificate of Title.”

·The following documents were not received by the trustee until August 2003:

1.    Original Certificate of Title;

2.    Discharge orf mortgage signed by Starr-Bowcett Co Home Loans Society No.4 Limited;

3.    Discharge of mortgage signed by ANZ Banking Group Limited;

4.    Transfer signed February 1996;

5.    Survey report;

6.    Certificate of Compliance;

7.    Section 149 Certificate.

·     Ms Combe located the documents in late January 2003, after attempting to track down her former solicitors;

·On 10 July 2003 the trustee issued a Demand on Mr Farrar, Ms Combe’s solicitor, for the documents. This followed a telephone conversation between the trustee and Mr Farrar in which Mr Farrar advised he had copies of a discharge of mortgage and a transfer;

·On 11 July 2003 the trustee wrote to Ms Combe again demanding delivery of the original documentation by 22 July 2003. A further demand was made on 24 July 2003; and

·On 8 August 2003 the trustee received the originals from Mr Farrar who had in turn received those originals from Ms Combe on 6 or 7 August 2003.

9.      These facts support the existence of the ground on which the objection was lodged, that is, Ms Combe, when requested in writing by the trustee to provide written information about her property, failed to comply with the request. In particular, Ms Combe, when asked by the trustee by letter dated 22 November 2002 to provide, among other documents, the certificate of title, after locating the documents in January 2003, did not provide them to the trustee, or to her solicitor until August 2003. I note that further requests in writing had been made by the trustee on 11 July 2003 and 24 July 2003. In addition, the trustee requested the documents from Mr Farrar by letter dated 10 July 2003.

10.     It remains for me to consider whether Ms Combe had a reasonable excuse for failing to provide the documents.

11.     Ms Combe maintained that she had advised the trustee on 3 February 2003 that she was represented by Mr Farrar and that the trustee should have directed his requests for the documents to Mr Farrar. She provided copies of the documents to Mr Farrar in late January 2003. I note that Mr Farrar’s evidence was that in a discussion with the trustee he had asked Mr Farrar if he knew where the certificate of title was and Mr Farrar answered that he had a copy. I add that Mr Farrar’s evidence was that he did not have a note of that conversation.  Mr Farrar also said that Ms Combe did not instruct him, between February and July 2003, to give the documents to the trustee, nor did she give him copies of letters from the trustee requesting the documents.

12.     The trustee’s evidence was that he did not become aware that Mr Farrar had access to the documents until he received a note left at reception by Ms Combe on 9 July 2003 saying:

“If you had inquired at White Barnes, solicitors you had been dealing with you both had discovered that these documents were available to you after I located them in about March this year…”

“…Mr Allan Farrar surely would have informed you that I have located these documents and that he would need them to raise the loan once you had provided him the Bills of Costs of the legal fees (in a taxable form)..”

13.     In Ms Combe’s written submission to the Tribunal she wrote:

“I had a reasonable excuse as explained under section 149N(1A)(c) not to hand over the deeds because Mr Farrar needed them to complete the loan application and he did not advise me to hand them over until August 2003. (presumably because the trustee did not inform Mr Farrar he wanted them.) I presumed Mr Farrar would advise me once the trustee discussed the matter with Mr Farrar after 8 April 2003.”

14.     Ms Combe’s evidence was that she had an offer of a loan from Ms Bechara which would allow the bankruptcy to be annulled. There was correspondence between Mr Farrar and the trustee in relation to this possibility and requests by Mr Farrar for the payout figure.  A payout figure was advised by the trustee and later amended and then it appears that discussions fell away.  Mr Farrer’s evidence was that he was acting for Ms Combe in relation to the refinancing and the loan from Ms Bechara and that he was not giving her general advice on bankruptcy.

15.     In the meantime the trustee had, in order to become registered as the proprietor of Ms Combe’s house, commenced action in the Family Court to compel Ms Combe’s former husband to execute a Transfer of title in accordance with orders previously made by the Court.  His evidence was that Ms Combe had told him her former husband had refused to execute the Transfer.  This had, however, already been done and the signed transfer was in Ms Combe’s possession together with the certificate of title and other documents from at least January 2003.  This was not made known to the trustee, however, until 9 July 2003 when Ms Combe left a note at reception of the trustee’s firm.

16.     The excuse put forward by Ms Combe as to why, in the face of clear and repeated requests from the trustee, she did not provide the documents, is not, in the circumstances, reasonable.  She appears to have been intent on keeping the documents for her own purposes associated with the proposed loan from Ms Bechara.  While it may be that she was confused about the role of the trustee and made a number of assumptions about communications between the trustee and Mr Farrar, she could not have failed to understand that the trustee, by his repeated demands, sought and continued to seek the documents he had requested.  In this regard I note that she had not provided copies of those demands to Mr Farrar nor had she instructed him to provide any documentation to the trustee.  I also note Mr Farrar’s evidence that his instructions were limited to the proposed loan from Ms Bechara and he did not act for Ms Combe generally in relation to the bankruptcy.

17.     For these reasons I do not consider that Ms Combe had a reasonable excuse for failing to provide the documents to the trustee.  It follows that, in the absence of a reasonable excuse, and where there is evidence that Ms Combe failed, when requested in writing, to provide written information about her property, the objection must not be cancelled.

Decision

18.     The decision under review is affirmed.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member

Signed:         ......[Linda Blue]..................................................
  Associate

Date of Hearing  13 October 2004
Date of Decision  13 December 2004
Solicitor for the Respondent     Mr Michael Murray