Duckworth v Field

Case [2023] FCA 801

FEDERAL COURT OF AUSTRALIA

Duckworth v Field [2023] FCA 801

File number: WAD 60 of 2023
Judgment of: BANKS-SMITH J
Date of judgment: 14 July 2023
Catchwords: BANKRUPTCY - notice of objection to automatic discharge from bankruptcy - power to make such order as court thinks just and equitable - no evidence provided by trustee - open to infer on evidence tendered by bankrupt that subsequent substantial compliance with request for financial information - other discretionary factors - order that notice of objection be withdrawn
Legislation: Bankruptcy Act 1966 (Cth) ss 5, 6A, 30, 73, 139U, 139W, 139WA, 149, 149A, 149B, 149C, 149D, 149J, 149K, 149N, Schedule 2 (Insolvency Practice Schedule (Bankruptcy)) ss 5‑30, 90-15, 90-20
Cases cited:

Booth v Offerman as trustee of the bankrupt estate of Geoffrey David Booth [2019] FCA 5

Frigger v Trenfield [2019] FCA 1746

Frost v Sheahan [2005] FCA 1014

Frost v Sheahan (Trustee) [2009] FCAFC 20

Macchia v Nilant [2001] FCA 7; (2001) 110 FCR 101

Mango Boulevard Pty Ltd v Whitton [2015] FCA 1169; (2015) 242 FCR 331

Nguyen v Pattison [2005] FCA 650

Re Tyndall; Ex parte Official Receiver (1977) 30 FLR 6

Smith v Trustee of the Property of Richard John Smith (a bankrupt) [2023] FCA 300

Water Corporation v Duckworth [2017] FCCA 2216
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 66
Date of hearing: Determined on the papers
Counsel for the Applicant: The applicant was self-represented
Counsel for the Respondent: The respondent did not appear

ORDERS

WAD 60 of 2023
BETWEEN:

NEIL JAMES DUCKWORTH

Applicant
AND:

MALCOLM FIELD

Respondent

ORDER MADE BY:

BANKS-SMITH J

DATE OF ORDER:

14 JULY 2023

THE COURT ORDERS THAT:

1.The respondent withdraw the objection to discharge dated 6 February 2020 forthwith.

2.The originating application dated 17 March 2023 and the interlocutory application dated 17 March 2023 are otherwise dismissed.

THE COURT NOTES THAT:

A.Pursuant to s 149A(3) of the Bankruptcy Act 1966 (Cth) the applicant is taken to be discharged from bankruptcy upon the objection being withdrawn.

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


REASONS FOR JUDGMENT

BANKS-SMITH J:

  1. Mr Neil Duckworth was made bankrupt on 29 September 2017 by a sequestration order made by the (then) Federal Circuit Court:  Water Corporation v Duckworth [2017] FCCA 2216. The Official Trustee was appointed his trustee in bankruptcy at that time. In the ordinary course, pursuant to s 149 of the Bankruptcy Act 1966 (Cth) (automatic discharge), Mr Duckworth would have been discharged from bankruptcy on about 14 October 2020, being three years from when he provided his completed statement of affairs to the Official Receiver.

  2. However, on 6 February 2020 the respondent, who by then was the Trustee, filed an objection to Mr Duckworth's discharge from bankruptcy on the grounds that Mr Duckworth failed to comply with his statutory obligation to disclose particulars of income or…

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Duckworth v Field [2023] FCA 801
Case
[2023] FCA 801
Decision Date

CaseChat Overview and Summary

The case of Duckworth v Field involved Mr Duckworth, the applicant, objecting to an automatic discharge from bankruptcy by the Official Trustee, Ms Gamble, represented by Ms Field. The dispute centred around the Official Trustee's refusal to withdraw a notice of objection to Mr Duckworth's discharge from bankruptcy. The matter was heard in the Federal Circuit and Family Court of Australia.

The primary legal issues were whether the notice of objection was validly issued and if the Official Trustee's refusal to withdraw the objection was just and equitable. The court considered the obligations under s 139U of the Bankruptcy Act 1966 (Cth) that required Mr Duckworth to provide financial information. The court also evaluated the discretionary powers of the court under s 149D(1)(e) to make an order as it thinks just and equitable.

The court found that the notice of objection was validly issued, as it was based on Mr Duckworth's failure to provide the requested financial information as required by s 139U. The court observed that the Official Trustee's refusal to withdraw the objection was within her discretion. However, the court considered other factors, such as Mr Duckworth's subsequent substantial compliance with the request for financial information. The court concluded that it was just and equitable to order the withdrawal of the notice of objection. The court noted that Mr Duckworth would be deemed discharged from bankruptcy upon the objection being withdrawn.

In conclusion, the court ordered the respondent to withdraw the objection to discharge forthwith and dismissed the other applications. The court's decision recognised the importance of compliance with the Bankruptcy Act while also considering the broader context of the case.

Orders

Orders of the court

1. The respondent withdraw the objection to discharge dated 6 February 2020 forthwith.

2. The originating application dated 17 March 2023 and the interlocutory application dated 17 March 2023 are otherwise dismissed.

THE COURT NOTES THAT:

A. Pursuant to s 149A(3) of the Bankruptcy Act 1966 (Cth) the applicant is taken to be discharged from bankruptcy upon the objection being withdrawn.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

It is s 149(1)(e) that is relevant in this case. As is apparent from that provision, s 139U requires a bankrupt to provide certain financial information. It relevantly provides:139UBankrupt to provide evidence of income(1)A bankrupt must, as soon as practicable, and in any event not later than 21 days, after the end of a contribution assessment period, give to the trustee:(a) a statement:(i)setting out particulars of all the income that was derived by the bankrupt during that contribution assessment period; and(ia)setting out particulars of all the income that was derived by each dependant of the bankrupt during that contribution assessment period; and(ii)indicating what income (if any) the bankrupt expects to derive during the next contribution assessment period; and(iii)indicating what income (if any) the bankrupt expects each dependant of the bankrupt to derive during the next contribution assessment period; and(b)such books evidencing the derivation of the income referred to in subparagraph (a)(i) as are in the possession of the bankrupt or the bankrupt can readily obtain.Penalty: Imprisonment for 6 months.(2)The particulars that a bankrupt is required to include in a statement given to the trustee under subparagraphs (1)(a)(i) and (ia) are all the particulars that are known to the bankrupt and any particulars that the bankrupt can readily obtain.(3)Without limiting the generality of paragraph (1)(b), the books that a bankrupt is required to give to the trustee under that paragraph in respect of a contribution assessment period include:(a)if the bankrupt received from his or her employer one or more pay slips or other documents evidencing salary or wages paid to him or her by that employer during that period--that document or each of those documents; and (b)any copy of a group certificate or payment summary (within the meaning of section 16-170 in Schedule 1 to the Taxation Administration Act 1953) in the possession of the bankrupt that relates in whole or in part to that period; and (c)any statement provided to the bankrupt by an ADI or other financial institution that shows periodic payments made during that period to an account kept by the bankrupt (either alone or jointly with any other person) with that institution; and (d)any notice of assessment issued to the bankrupt under the Income Tax Assessment Act 1936 in respect of a year of income in which that period is included; and (e)if the bankrupt is in receipt of a pension, allowance or other benefit under a law of the Commonwealth, of a State or of a Territory - any letter or other document sent or given to the bankrupt by the Department or authority that administers the legislation or scheme under which the benefit is provided. The reference to contribution assessment periods (CAPs) in s 139U is relevant to this application. Relevantly, had Mr Duckworth's bankruptcy continued for the usual three year period, he would have been required under s 139U to provide to the Trustee financial information relating to the following CAPs:(a)29 September 2017 to 28 September 2018 (CAP1);(b)29 September 2018 to 28 September 2019 (CAP2); and(c)29 September 2019 to 28 September 2020 (CAP3).

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Although I informed Mr Duckworth that such applications are generally dealt with by oral hearing, he requested that I deal with it on the papers, saying that he had nothing further to add.Consideration The patchy nature of the evidence before me from Mr Duckworth, and the absence of any evidence from the Trustee, has left me in a position where it has been necessary to make assumptions and draw a number of inferences, as is apparent in the following reasons. Mr Duckworth makes no complaint about the form of the notice of objection itself. Because the Trustee relied on s 149D(1)(e) by way of the ground of objection, there was no obligation to provide reasons for issuing the notice: s 149C(1A). As Rangiah J observed in Mango Boulevard (at [134]), s149C(1A) does not remove the necessity for a trustee to have reasons to issue a notice of objection, but there is no obligation to state them in the notice. Section 149C(1)(b) also required the Trustee to refer to the evidence or other material that in the opinion of the Trustee establishes the ground relied upon. As explained in Smith v Trustee of the Property of Richard John Smith (a bankrupt) [2023] FCA 300 at [44] (Collier J), the notice must put the bankrupt in a position where they can identify, and if necessary search out, the evidence relied upon for the objection. In this case, the two letters referred to in the notice of objection were in the possession of Mr Duckworth and they explained in clear terms that the failure to provide the requested information founded the issue of the notice. The 1 August 2019 letter expressly asked for the ICQs and supporting documents, including bank statements, to be provided. The 15 January 2020 letter noted the lack of reply to the 1 August 2019 letter and again expressly sought the completion of the ICQs and supporting documents, including bank statements. There is no question that Mr Gamble and the Trustee were entitled to ask Mr Duckworth to provide the requested information, and he was obliged to comply: s 139U of the Bankruptcy Act. Bank statements fall within the 'books' that might evidence income ('books' is defined broadly in s 5 of the Bankruptcy Act, and includes accounts). Mr Duckworth appears to rely on the initial letter from the Official Trustee's office of 15 December 2017 to assert that he was not obliged to make income contributions, and so was not obliged to provide further information. Such a submission ignores the information provided by Ms Hale to the effect that he would continue to be required to provide information about his income during the course of his bankruptcy. More importantly, it ignores the operation of s 139WA (see [13] above). The provision of the 1 August 2019 letter and non-compliance with that letter are sufficient in the present circumstances for me to proceed on the basis that the notice of objection was validly issued. It follows, and I infer, that Mr Duckworth's real complaint is that the trustee has more recently refused to withdraw the objection. Whilst one could consider the refusal to withdraw the objection to be a continuing act over a period of time, I proceed on the basis that the decision reflected in the email to Mr Duckworth of 6 October 2022 is the relevant action of the Trustee for the purpose of this application. The Court considered such an application in Frost v Sheahan [2005] FCA 1014 (affirmed on appeal - Frost v Sheahan (Trustee) [2009] FCAFC 20 (Frost FCAFC)). It was accepted that the trustee's refusal to withdraw the notices in that case constituted an act, omission or decision of the trustee within the meaning of (then) s 178, such that it could be reviewed having regard to the supervisory jurisdiction over the conduct of a trustee contemplated by that provision.