Estate of Nicholas Saad and Inspector-General in Bankruptcy

[2018] AATA 487

Estate of Nicholas Saad and Inspector-General in Bankruptcy [2018] AATA 487 (15 March 2018)

Division:TAXATION & COMMERCIAL DIVISION

File Number(s):      2017/0324

Re:Estate of Nicholas Saad

APPLICANT

AndInspector-General in Bankruptcy

RESPONDENT

DECISION

Tribunal:Deputy President B W Rayment

Date:15 March 2018

Place:Sydney

The reviewable decision is set aside and remitted for reconsideration with a direction that the trustee’s objection is to be cancelled because there is insufficient evidence to support the existence of the ground of the objection.

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Deputy President B W Rayment

Catchwords

BANKRUPTCY – notice of objection to discharge lodged by trustee – request by applicant for review of notice – whether applicant intentionally failed to disclose beneficial interest in property – decision set aside and remitted

Legislation

Bankruptcy Act 1966, ss 149D(1)(ma)

REASONS FOR DECISION

Deputy President B W Rayment

15 March 2018

1. Mr Nicholas Saad is a bankrupt. The delegate of the Inspector-General in Bankruptcy decided on 22 December 2016 to confirm the objection of his trustee to his discharge from bankruptcy. The decision of the delegate of the Inspector-General is before me for review.

2. The trustee’s objection to Mr Saad’s discharge was based upon s.149D(1)(ma) of the Bankruptcy Act 1966 (Cth) (the Act). That section makes it a ground of objection to discharge that the bankrupt intentionally failed to disclose to the trustee the bankrupt’s beneficial interest in any property.

3. The basis of that allegation is that the bankrupt signed on 9 October 2013 a Statement of Affairs declaring that the particulars set out in the statement were correct. The form drew attention to the fact that signing a declaration that the person knows to be false is an offence under s.267(2) of the Act.

4. The form contained provision for a person who provided assistance to the declarant in completing the form. That part of the form was filled out by Mr Michael Shehadie and the reason he gave as to why the debtor required his assistance was that the “debtor is deaf + intellectually challenged”. The printed form contained a declaration by Mr Shehadie in the following terms: “I declare that before this form was completed, I carefully read to/interpreted for the person named above the prescribed information and the questions on this form or [where the person is physically incapacitated] satisfied myself that the person had read and understood the information and questions. The responses provided in this form are those of the person named above.” (emphasis in original)

5. Question 32 on the form asked: Do you have an interest in a deceased estate? The response given was “No”.

6. In fact, Mr Saad was named in his late mother’s will. The will provided that the bankrupt “may live in [the deceased’s] house with his wife and family as long as he wishes provided he pays the rates and taxes levied on the property, the premiums on any insurance policies taken out by [the deceased’s] Trustees on the property and keeps the property in good repair to [the deceased’s] Trustee’s satisfaction”. The will also provided that until the bankrupt has, in the opinion of the Trustees, ceased to live in the house permanently or to comply with the conditions of his right of occupation, it shall not be sold without his consent.

7. There was also a provision that on 1 February 2015 the Trustees shall stand possessed of the property upon trust for such of Nicholas Saad, his children and his wife, as shall then be living in equal shares as tenants in common.

8. As at the date on which Mr Saad signed the document, he was exercising the right of residence given to him by the will and had an expectation that he would inherit a beneficial interest in the property subject to his survival until 2015. An affirmative answer to the question asked was therefore required.

9. Mr Saad said in evidence before me that he knew that his mother’s will made provision for him.

10. He said however that he did not read the form before signing it, and signed it where Mr Shehadie indicated. He says he did not know what it said.

11. Mr Saad is profoundly deaf as a result of a head injury sustained when he fell off a truck as a young child. He has major hearing disorders, and associated speech impairment. When communicating in person he relies heavily on lip-reading. Dr Bauer, his treating general practitioner, says that it has been his experience that he frequently misunderstands communications passed to him.

12. My own observation of him in the witness box accords with Dr Bauer’s observations concerning lip-reading and frequent miscommunication.

13. Dr Bauer said in his report of 31 August 2017:

    Mr Saad has major learning difficulties. He left school at the age of approximately 13 as he was unable to manage any high schooling. In his primary schooling he had extreme difficulty with fundamental literacy and numeracy. Today he is unable to write in a most basic form with any coherency. He will frequently ask others to undertake this task on his behalf. He does attempt to try and educate himself by trying to read a newspaper. It is my experience that he will invariably find this task extremely difficult.

14. He said that Mr Saad has suffered major anxiety and depression throughout his life, and had a major period of depression and anxiety from 2010 to 2014.

15. It does not seem that Mr Saad has been examined by a neurologist, or otherwise examined to determine the extent of any cognitive disorder. However his learning difficulties and school performance suggests that some cognitive disorder or mental incapacity may be present.

16. I did not detect in the manner in which he gave evidence any sign that he was dissembling. He appeared to me to be telling the truth.

17. I have not heard from Mr Shehadie, who is his cousin, and a solicitor, as to the circumstances in which he wrote the answers which he did write on the Statement of Affairs of 2013.

18. The Inspector-General drew attention to the answers sent by Mr Saad in August 2014 to an questionnaire sent to him by the Australian Financial Security Authority about the ownership of the property in which he lived, to which the answer was that his mother owned the property, that he did not pay rent and that no one else contributed to his rent or board. Mr Shehadie prepared those answers as well, and Mr Saad said he signed it without reading it. The “ownership” of the property may be a matter for debate, but I do not think that Mr Saad was the source of any error in the answer.

    DECISION

19. The conclusion which I reach on the whole of the evidence is that Mr Saad did not intentionally fail to disclose to the trustee his beneficial interest in any property, so that the reviewable decision should be set aside and remitted for reconsideration with a direction that the trustee’s objection is to be cancelled because there is insufficient evidence to support the existence of the ground of the objection.

I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment

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Associate

Dated: 15 March 2018

Date(s) of hearing:	14 March 2018
Solicitors for the Applicant:	AR Walmsley & Co Solicitors
Solicitors for the Respondent:	Australian Financial Security Authority