Do and Inspector-General in Bankruptcy
[2020] AATA 1528
•2 June 2020
Do and Inspector-General in Bankruptcy [2020] AATA 1528 (2 June 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2020/2037
Re:Tien Dung Do
APPLICANT
AndInspector-General in Bankruptcy
RESPONDENT
DECISION
Tribunal:Senior Member D O'Donovan
Date:2 June 2020
Place:Canberra
The Tribunal refuses to extend the time for making an application for review of a decision made by the Inspector-General in Bankruptcy on 8 September 2017.
........................................................................
Senior Member D O'Donovan
PRACTICE AND PROCEDURE – Taxation and Commercial – decision by delegate to affirm Trustee’s objection to discharge bankrupt estate – interlocutory application for an extension of time – application for review made outside the prescribed time– explanation for the delay inadequate - whether it is reasonable in all the circumstances to grant the extension of time – delay outweighs other competing considerations – application refused
Administrative Appeals Tribunal Act 1975 s 29
Bankruptcy Act 1966 ss 77(1)(G)(ii), 149(4), 149D(1)(d), 149D(1)(e), 149D(1)(g)(i), 149D(1)(g)(ii), 149D(i), 149D(1)(ia), 149F, 149K, 149N
Arbon and Comcare [2017] AATA 2870
Seiler v Minister for Immigration, Local Government and Ethnic Affairs [1994] FCA 12
REASONS FOR DECISION
Senior Member O'Donovan
2 June 2020
This is an application pursuant to s 29(7) of the Administrative Appeals Tribunal Act 1975 (the Act) seeking to extend the time for making an application for review of a decision. The applicant lodged the application on 7 April 2020 with respect to a decision that was made on 8 September 2017. The application is brought 914 calendar days beyond the prescribed time for making an application for review.
The decision under review was made by a delegate of the Inspector-General in Bankruptcy. The decision was to uphold the decision of Mr Do’s trustee in bankruptcy to object to Mr Do’s discharge on the grounds set out in sections 149D(1)(d), 149D(1)(e), 149D(1)(g)(i), 149D(1)(g)(ii), 149D(i), and 149D(1)(ia) of the Bankruptcy Act 1966 (the Bankruptcy Act). The effect of the decision was that Mr Do will remain bankrupt until 18 March 2025 unless the objection is withdrawn by the trustee, the bankruptcy is annulled, or the decision of the Inspector-General is overturned by the Administrative Appeals Tribunal (Tribunal) or the Federal Court or Federal Circuit Court.
In response to the applicant’s application for an extension of time to seek review, on 17 April 2020, the Respondent notified the Tribunal that it did not oppose the granting of an extension of time. However, the Respondent drew the Tribunal’s attention to the articulation of the applicant’s appeal rights in the delegate’s decision letter and provided email correspondence of an exchange between the Applicant and his trustee in bankruptcy dated 1 and 3 October 2019.
On 23 April 2020, the Tribunal wrote to the parties indicating that it was not persuaded, on the material currently before it, that an extension of time should be granted. The Tribunal notified the applicant of its proposed process in the following terms:
The Tribunal asks that you file any further material (and evidence) upon which you wish to rely in support of your application for an extension of time by 15 May 2020.
The material you submit should address the following matters, which are relevant to the exercise of the Tribunal’s discretion to extend time (noting that you have already raised matters which will be taken into account):
1.The length of the delay;
2.Your explanation for the delay;
3.Whether you took any steps after the decision of the delegate to make the delegate aware that you contested the delegate’s decision;
4.The basis on which you will contest the merits of the delegate’s decision.
Do not feel constrained by this list. The test for whether the time for making an application should be extended is whether the Tribunal is satisfied that it is reasonable in all the circumstances to do so. Accordingly, there may be other matters which you wish to bring to the Tribunal’s attention which may be relevant.
On 15 May 2020, the Applicant provided the Tribunal with a written submission and attached a letter dated 14 May 2020 from Chamberlains Law Firm, representing the trustee in bankruptcy, in respect of Federal Circuit Court proceedings as well as the Amended Originating Application made by the trustee in bankruptcy in the Federal Circuit Court.
On 20 May 2020, the Applicant wrote an unsolicited email to the Tribunal containing a short submission in addition to his submission of 15 May 2020.
The Tribunal must now consider whether to exercise its discretion to extend the time for making an application for review. It can only exercise that discretion if it is satisfied that it is reasonable in all the circumstances to do so.
In its consideration, the Tribunal has taken into account the application for an extension of time, the applicant’s submissions and has taken into evidence the following documents:
(a)Exhibit 1 – Letter of Vincents, Applicant’s trustee in bankruptcy, dated 7 July 2017 notifying of the lodgement of a Notice of Objection to the Applicant’s discharge from bankruptcy and enclosing the Objection and further information.
(b)Exhibit 2 - Reviewable Decision of the Inspector-General in Bankruptcy dated 8 September 2017.
(c)Exhibit 3 – Email exchange between the Applicant and his trustee in Bankruptcy between 1 and 3 October 2019.
(d)Exhibit 4 – Amended Originating Application in the Federal Circuit Court.
(e)Exhibit 5 – Letter of Chamberlain’s Law Firm, representing the trustee in bankruptcy, dated 14 May 2020 in respect of Federal Circuit Court.
STATUTORY FRAMEWORK
Under normal circumstances a bankrupt is discharged from bankruptcy three years after he files his statement of affairs.[1]
[1] The Bankruptcy Act s 149(4).
However, the Bankruptcy Act provides for an extension of the bankruptcy for a period of 8 years from the filing of the bankrupt’s statement of affairs. An extension is obtained by the trustee in bankruptcy by filing a Notice of Objection to Discharge with the Official Receiver.[2]
[2] The Bankruptcy Act s 149B.
The grounds which can be relied upon in objecting to discharge are numerous. In the applicant’s case the grounds relied upon by the trustee were:
(a)The bankrupt, when requested in writing by the trustee to provide written information about the bankrupt’s property, income or expected income, failed to comply with the request;
(b)The bankrupt failed to disclose any particulars of income or expected income as required by certain provisions of the Bankruptcy Act;
(c)In the period of 5 years immediately before the commencement of the bankruptcy or at any time during the bankruptcy the bankrupt spent money but failed to explain adequately to the trustee the purpose for which the money was spent;
(d)In the period of 5 years immediately before the commencement of the bankruptcy or at any time during the bankruptcy the bankrupt disposed of property but failed to adequately explain to the trustee why no money was received as a result of the disposal or what the bankrupt did with the money received as a result of the disposal;
(e)The bankrupt has failed, whether intentionally or not, to disclose to the trustee a liability of the bankrupt that existed at the date of the bankruptcy; and
(f)The bankrupt failed to comply with subparagraph 77(1)(a)(ii) of the Bankruptcy Act which requires the bankrupt ‘forthwith after becoming a bankrupt’ to give to the trustee any passport or document issued for the purposes of travel held by the bankrupt.
Once an objection is filed the trustee must give a copy of the Notice of Objection to the bankrupt who may request that the Inspector-General review the decision of the trustee to file the Notice of Objection.[3]
[3] The Bankruptcy Act s 149F.
The Inspector-General may review the decision to file a Notice of Objection if requested to do so by the bankrupt provided that the reasons appear to the Inspector-General to be sufficient to justify such a review.[4]
[4] The Bankruptcy Act s 149K.
A request by the bankrupt for review must be lodged no later than 60 days after the day on which the bankrupt is notified of the trustee’s objection and the Inspector-General must decide whether to review the decision and to make his or her decision within 60 days of the request being lodged.[5]
[5] The Bankruptcy Act s 149K(3) and (5).
The Inspector-General must cancel the objection if satisfied of certain matters specified in section 149N(1) of the Bankruptcy Act. If the Inspector-General is not satisfied of those matters the decision must be confirmed.[6]
[6] The Bankruptcy Act s 149N(3).
The Inspector-General must not cancel the objection if:[7]
(a)The objection specifies at least one special ground; and
(b)There is sufficient evidence to support the existence of at least one special ground specified in the objection; and
(c)The bankrupt fails to establish that the bankrupt had a reasonable excuse for the conduct or failure that constituted the special ground.
[7] The Bankruptcy Act s 149N(1A).
All bar one of the grounds (the ground identified in paragraph 11(e) above) relied upon by the trustee constituted a special ground.
In applying this provision, no notice is to be taken by the Inspector-General of any conduct of the bankrupt after the time when the ground concerned first commenced to exist.[8]
[8] The Bankruptcy Act s 149N(1B).
If the objection is cancelled by the Inspector General, the cancellation does not take effect until:[9]
(a)the end of the period within which an application may be made to the Tribunal for review; or
(b)if such an application is made – the decision of the Tribunal is given.
[9] The Bankruptcy Act s 149N(2).
Section 149Q provides for applications to be made to the Tribunal for review of decisions of the Inspector-General.
THE TRIBUNAL’S POWER
Under s 29(7) of the Act, the Tribunal may extend the time for filing an application for review if ‘it is reasonable in all the circumstances to do so.’
The principles that are applied were well articulated by SM Britten-Jones in Arbon and Comcare in the following terms:[10]
[10] [2017] AATA 2870.
Generally, to extend time the Tribunal must take into account the explanation for the delay, any prejudice to the respondent and whether the applicant has an arguable case. The principles expounded by Wilcox J in Hunter Valley Developments v Cohen will apply recognising that an explanation for delay is one factor to be considered when exercising the discretion to allow an extension but is not an essential precondition.
The list of matters identified by Wilcox J in the Hunter Valley decision are not exhaustive and were intended to provide only general guidance in the exercise of the relevant discretion.
In terms of an assessment of the merits of the case French J (as His Honour then was) observed in Seiler v Minister for Immigration, Local Government and Ethnic Affairs that:
... To say a substantive application has a reasonable prospect of success is to say no more than that there is a finite non-trivial probability that it will succeed....It is difficult to imagine any case which appeared weak but not hopeless in which it would be proper to refuse an extension on that account. On the other hand, the stronger the case appears to be, the higher may be the probability that an injustice will be done if an extension is refused. So a strong case may be a positive factor in favour of the grant of extension, but an apparently weak case cannot be treated as a factor weighing against it...
As to the required extent of investigation into the merits Katzmann J said in Actew AGL Distribution v Australian Energy Regulator that:
... it is inappropriate for this purpose to fully investigate the merits, although an obvious strength or weakness in the applicant’s case is a factor for or against the exercise of the discretion. ...
Further, Besanko J said in Hamden v Secretary, Department of Human Services]:
As far as the merits of the substantive application are concerned, it is not for the Court to determine the application at this stage. However, an extension of time should not be granted if the substantive application is not reasonably arguable. Furthermore, if the prospects of success of a substantive application are plainly strong or plainly weak, then that may be a relevant consideration depending on the nature of the other factors (for example, the period of the delay and the explanation for it) relevant to the application for an extension of time.
(citations omitted)
I have applied this framework in determining the applicant’s application for an extension of time.
THE EXTENT OF AND REASONS FOR THE DELAY
The length of delay is very significant and weighs heavily against an extension.
The applicant has given a number of explanations for the delay. The first was included in the application for an extension of time form as follows:
I have a chronic medical condition of sleep apnoea and its side effects of noisy snoring, depression and sleepy and Resigned from public service job back 2007. I did not have legal advice for applying an appeal or to be able to understand legal processes. In 2017 I contacted ombudsman to request a review and I just know to contact AAT for an appeal.
This explanation was supplemented to some degree in the applicant’s email responding to the opportunity to comment provided by the Tribunal. The explanation for the delay was that the applicant was not ‘fully aware of laws and procedures in this complicated field!’
As best can be understood from these two documents (the applicant’s last email submission does not address this issue), the applicant is contending the reasons for delay are:
(a)That health issues prevented his application;
(b)That he did not understand his rights of appeal
The applicant’s submission that he sought to dispute the delegate’s decision with the ombudsman will be dealt with under the next criteria.
In relation to the claim that the applicant has a chronic medical condition of sleep apnoea which has side effects of noisy snoring, depression and sleepiness, I accept that he has that condition. I also accept that the sleep apnoea as described reduced his personal functional efficiency over the last few years. However, what the applicant describes does not provide an adequate explanation for a delay of 914 days. The information about the effect of the condition is slight and unsupported by evidence of any sort. I can accept, based on what the applicant has said, that his sleep apnoea had a significant adverse effect on his day to day functioning but it does not explain a delay of 914 days. Accordingly, this aspect of the applicant’s explanation for delay is weak.
The applicant claims that he did not understand his review rights. I do not accept that submission. The applicant is the owner of substantial assets and, on his own admission was employed in the public service. Although his written English is grammatically poor it reveals that he has a sophisticated understanding of legal processes and the ongoing issues that have arisen in relation to his bankruptcy. I am satisfied that he can read and understand complex English correspondence.
The letter of 8 September 2017 from the delegate advised the applicant of his review rights in 2 places. On the first page of the letter it set out the following:
The effect of my decision is that you will remain bankrupt until 18 March 2025 unless the objection is withdrawn by the trustee, the bankruptcy is annulled, or the decision of the Inspector General is overturned by the Administrative Appeals Tribunal or the Court.
Details of the right to appeal this decision are set out at the end of this document.
On the last page of the letter under the heading ‘Appeal right’, the following text appeared:
Subsection 149P(3) of the Act provides that if either you or the trustee are dissatisfied with my decision, an appeal may be made to the Administrative Appeals Tribunal pursuant to subsection 29(1) of the Administrative Appeals Tribunal Act. Any such application must be in writing and in accordance with Form 1 in Schedule 1 to the Administrative Appeals Tribunal Regulations. It must set out the reasons for the application and should be made within 28 days of receipt of this letter.
Accordingly, the applicant was put on notice of how and where to appeal. I do not accept the applicant’s explanation that he lacked an understanding of his appeal rights.
The applicant’s explanations for delay are weak and the length of delay is extensive accordingly this factor weighs heavily against the grant of an extension.
WHETHER HE TOOK ANY STEPS TO MAKE THE INSPECTOR-GENERAL AWARE THAT HE DID NOT ACCEPT THE DECISION.
Based on the material before me I am not satisfied that the applicant took steps to make the Inspector-General aware that he did not accept the decision.
The applicant says that in 2017 he approached the Ombudsman to request a review.[11] Given that I am satisfied that he understood his review rights it is not relevant that he approached the Ombudsman. Further, as the Ombudsman has a formal statutory role in relation to the Inspector-General’s powers (see s 149K(2)), I am confident that if the Ombudsman would have provided accurate information to the applicant about his review rights if an approach was made.
[11] Applicant’s application for extension of time dated 6 April 2020.
The applicant also claims that he contested with the delegate the extension of the bankruptcy.[12] However, he provides no particulars at all of when and how he contested the extension; he does not indicate on what day this occurred or by what means. On the information provided I am not satisfied that the applicant ever contested the decision with the delegate.
[12] See applicant’s email dated 15 May 2020 to Nakita Bache at the Tribunal.
There is no evidence that the applicant advised the Inspector-General that he was contesting the decision and accordingly this criteria weighs against the applicant.
PREJUDICE TO THE RESPONDENT
There is no evidence of any specific prejudice to the respondent. However, I note that the Bankruptcy Act limits the range of conduct which the Tribunal can have regard to in undertaking its review.[13] Accordingly, the matters which must be established are inevitably historical. Prejudice may well arise as a consequence of the loss of memory of witnesses or the loss of ready access to relevant material. However, I note that the respondent has not suggested it has been prejudiced by delay. In those circumstances I will treat this factor as neutral.
[13] Provision of bankruptcy act
THE SUBSTANTIVE MERITS
The applicant’s submissions on the merits of the decision are uncontested by the respondent.
The focus of the applicant’s submission is an attack on the trustee in bankruptcy’s decision in relation to assets he claims are not his but which he holds as trustee for a self-managed superannuation fund. Whether that is or is not the case is a matter for the trustee in bankruptcy to determine.
The principle concern in Tribunal proceedings, if an extension of time is granted, will be whether there is evidence to support the special grounds relied on and whether the applicant had a reasonable excuse for the conduct constituting the special ground. No notice is to be taken of any conduct of the bankrupt after the time when the ground commenced to exist.
In the reviewable decision, reliance is placed on specific failures by the applicant to do certain things, these include:
(a)A failure to comply with a request from the trustee to provide information about the bankrupt’s property dated 28 March 2017.[14]
(b)A failure to explain adequately to the trustee why no money was received as a result of the disposal of specific property or what was done with the money received as a result of the disposal of that property, notwithstanding that three letters dated 8 December 2016, 5 January 2017 and 28 March 2017 sought information in relation to the disposals.
(c)A failure to give to the trustee the applicant’s passport pursuant to section 77(1)(g)(ii) notwithstanding a letter directing him to do so dated 28 March 2017. On 10 July 2017 the applicant denied that the issue had ever been raised with him before. The trustee’s submission, which included a copy of the letter directing the applicant to provide the passport established to the inspector-General’s satisfaction that this was not the case
[14] The Bankruptcy Act s 149D(1)(d).
Each of these specific matters which are outlined in the Inspector-General’s decision raise the existence of a specified ground and address the question of whether the applicant had a reasonable excuse for non-compliance.
The applicant’s submission on the merits of his case are extremely vague and do not focus on the very limited range of issues which this Tribunal can consider in any review. The only relevant response on the issues which sit at the heart of what the Tribunal must decide, is the following:
I had (sic) done all the possible tasks that I could, I have completed the SOA [statement of affairs], I also furnished all relevant documents to the trustee, I have attached the Panel Interview and clarified all the relevant facts with the Panel.
Accepted at its highest this could be said to address, in the most general way possible, the factual foundation for the finding of special grounds. All of the remaining submissions about the applicant’s case are irrelevant and go to issues which could not arise in the proceedings before the Tribunal.
On the basis of the submissions going to the merits of the case which are vague or irrelevant (but keeping in mind that it is not incumbent upon the applicant to bring forward evidence on the substantive points he would make on review), I am not satisfied that the applicant has any prospect of obtaining a different decision on review, let alone that he has ‘a finite non-trivial probability that it will succeed’[15] (emphasis added). Accordingly, this criteria does not assist him in persuading me that the discretion to extend should be exercised.
[15] Seiler v Minister for Immigration, Local Government and Ethnic Affairs [1994] FCA 12 at [29].
DECISION
In light of these findings, I refuse the application for an extension of time made on 7 April 2020 with respect to the reviewable decision dated 8 September 2017. The lengthy delay weighs heavily against the grant of an extension and the applicant has not provided material which persuades me that the other criteria assist him sufficiently to grant the extension.
I am not satisfied that it is reasonable in all the circumstances to extend the time for making an application.
I certify that the preceding 49 (forty nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member D O’Donovan.
........................................................................
Associate
Dated: 2 June 2020
Applicant: Self-Represented Respondent: Mr Matthew Schultz
0