David Ian Mansfield as trustee of the Bankruptcy Estate of Maria Fokas v Fokas
[2019] FCCA 134
•24 January 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DAVID IAN MANSFIELD AS TRUSTEE OF THE BANKRUPTCY ESTATE OF MARIA FOKAS v FOKAS | [2019] FCCA 134 |
| Catchwords: BANKRUPTCY – application to permit the trustee to proceed with the final distribution among the creditors in circumstances where the bankrupt has failed to provide a statement of affairs – condition imposed on payment of surplus upon annulment – the Applicant’s costs of and incidental to this application be paid out of the bankrupt estate. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.54, 77CA, 146, 153A |
| 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: |
| Applicant: | DAVID IAN MANSFIELD AS TRUSTEE OF THE BANKRUPTCY ESTATE OF MARIA FOKAS |
| Respondent: | MARIA FOKAS |
| File Number: | SYG 3606 of 2018 |
| Judgment of: | Judge Street |
| Hearing date: | 24 January 2019 |
| Date of Last Submission: | 24 January 2019 |
| Delivered at: | Sydney |
| Delivered on: | 24 January 2019 |
REPRESENTATION
| Solicitors for the Applicant: | Mr M Williams Grace Lawyers |
No appearance by or on behalf of the Respondent
ORDERS
The Court dispenses with the need for service of the application.
The Applicant distribute the dividends of the bankrupt estate of Maria Fokas amongst the creditors who have proved their debt in accordance with Part IV Division 5 of the Bankruptcy Act 1966 (Cth), as if the bankrupt had filed a Statement of Affairs, and those creditors had been declared as creditors therein on the following conditions:-
i.The Applicant proceed with the annulment of the bankruptcy under s 153A of the Bankruptcy Act 1966 (Cth).
ii.The surplus that would otherwise be paid to the former bankrupt on annulment is to be paid to the Official Receiver to be held by the Official Receiver on behalf of the bankrupt until the bankrupt completes, signs and provides to the Official Receiver a Statement of Affairs in accordance with the requirements of s 54 of the Bankruptcy Act 1966 (Cth) or until further order by the Court.
iii.The costs and expenses of the Official Receiver, in respect of or arising out of these conditions, are to be paid out of the surplus held by the Official Receiver on behalf of the former bankrupt on a trustee basis.
iv.The holding of the surplus by the Official Receiver on behalf of the former bankrupt does not prevent garnishee or attachment by a creditor or creditors of the surplus.
The Applicant’s costs of and incidental to this application be paid out of the bankrupt estate of Maria Fokas.
Liberty to apply on 3 days’ notice.
DATE OF ORDER: 24 January 2019
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3606 of 2018
| DAVID IAN MANSFIELD AS TRUSTEE OF THE BANKRUPTCY ESTATE OF MARIA FOKAS |
Applicant
And
| MARIA FOKAS |
Respondent
REASONS FOR JUDGMENT
This is an application within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”), in respect of an application under s 146 of the Act, to permit the trustee to proceed with the final distribution among the creditors that the trustee has been able to identify, in circumstances where the bankrupt has failed to provide a statement of affairs in accordance with the requirements of s 54 of the Act.
The trustee has read an affidavit, dated 20 December 2018, that identifies numerous endeavours by the trustee to obtain from the bankrupt a statement of affairs, as well as endeavours to effect service of a notice under s 77CA of the Act, which was unsuccessful.
The evidence adduced also, however, identifies numerous proceedings being taken by the bankrupt, from which the inference to be drawn is that the bankrupt has deliberately evaded service of the s 77CA notice, and from which the inference should be drawn that the bankrupt is well aware of, and is deliberately not compliant with, the obligation under s 54 of the Act.
The purpose of s 146 of the Act was identified by the learned Gyles J in Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968, at [4], to give the Court the means to ensure that those with an interest in the bankrupt’s estate are not prejudiced by reason of the failure of the bankrupt to provide a statement of affairs under s 54 of the Act. That purpose was also acknowledged in Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649 at [9].
I am satisfied on the evidence that the trustee has taken appropriate steps to identify, so far as the trustee is able, the creditors of the bankrupt estate. I am satisfied that this is an appropriate case in which the Court should make an order under s 146 of the Act to permit a final dividend to be paid to the creditors.
There is in fact a surplus that is available, as a result of the sale of a real property. The trustee, in these circumstances, is proposing to annul the bankruptcy under s 153A of the Act. The consequence of the annulment will mean that any unidentified creditor will not be prejudiced by reason of the bankruptcy that has taken place, and the failure by the bankrupt to have provided a proper statement of affairs identifying that creditor. The provision empowers the Court to impose terms as the Court thinks fit in respect of the order sought under s 146 of the Act. Those terms are not limited to the dividend and are capable of having application to the surplus.
In circumstances where the Court is satisfied that the bankrupt has deliberately failed to provide a statement of affairs, the Court is of the view that a condition should be imposed that the surplus paid to the official receiver should be retained until the bankrupt complies with the obligation identified under s 54 of the Act. The Court proposes to provide the option for further order of the Court if the former bankrupt or some other person seeks to agitate the condition.
The condition will also seek to make clear that the payment to the official receiver by the condition imposed is one which will not affect rights of enforcement of a creditor or creditors. The Court will ensure, in that regard, that the costs of or consequential to the Official Receiver complying with these conditions are met out of the surplus.
All of these are, in the Court’s opinion, within the scope of the terms and purpose under s 146 of the Act. Further, the terms all relate to the statement of affairs and the obligation of the bankrupt that the bankrupt did not comply with.
The proceedings brought before the Court today have been the subject of an attempt to effect service on the bankrupt as referred to above. It is apparent on the evidence that has been filed that the bankrupt has taken steps to avoid service of process by the trustee. The Court is satisfied on the evidence that has been filed that the trustee has taken appropriate steps to try and effect service of this application under s 146 of the Act. The Court is satisfied that imposing a further obligation on the trustee to take further steps would be to the detriment of the persons having interest in the dividends and would delay the payment of those dividends that should proceed as promptly as possible. The Court finds that the respondent is aware of the proceedings and dispenses with the need for service.
The Court notes that the making of orders in the absence of the respondent is one in respect of which the respondent has the right, under r 16.05(2)(a) of the Federal Circuit Court Rules 2001 (Cth), to apply to have the orders set aside. In that regard, the Court proposes to make an order expressly identifying liberty to apply, so as to facilitate that process by the bankrupt, or former bankrupt.
In that regard, if the former bankrupt attended Court under the liberty provided, and gave evidence meeting each of the requirements of the statement of affairs, it is likely that the Court would vary the orders made disposing with condition (ii) so as to permit release of the surplus provided the other conditions have been complied with.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Street
Date: 11 April 2019
3
2
3