Farnan and Inspector-General in Bankruptcy
[2007] AATA 1199
•2 April 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1199
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S200600345
GENERAL ADMINISTRATIVE DIVISION ) Re PATRICK FARNAN Applicant
And
INSPECTOR-GENERAL IN BANKRUPTCY
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date2 April 2007
PlaceAdelaide
Decision The application is dismissed pursuant to s 42B(1) of the Administrative Appeals Tribunal Act 1975 (Cth).
D G Jarvis
(Signed)
Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – bankruptcy – discharge from bankruptcy – review by tribunal of decision of Inspector-General in Bankruptcy to confirm decision by trustee to object to discharge from bankruptcy – trustee withdrew objection to discharge from bankruptcy before application heard by the tribunal – trustee’s objection thereby deemed never to have been made and applicant thereupon discharged from bankruptcy – general section conferring discretion on tribunal to give its decision some other effective date of operation displaced by specific provision of Bankruptcy Act as to date of cancellation of objection – application dismissed under s 42B of Administrative Appeals Tribunal Act 1975 (Cth).
Administrative Appeals Tribunal Act 1975 (Cth), s 42B
Attorney-General v Wentworth (1988) 14 NSWLR 481
Fearnley v Australian Fisheries Management Authority [2006] FCAFC 3
Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139
Re Brian Reddish and Civil Aviation Safety Authority [1999] AATA 721
Re Laird and Australian Broadcasting Tribunal (AAT 78/122, 10 May 1979)
Re Secretary, Department of Employment and Workplace Relations and Mitchell (2006) 92 ALD 201
Re Williams and Australian Electoral Commission (1995) 38 ALD 366
BANKRUPTCY – discharge from bankruptcy – review by tribunal of decision of Inspector-General in Bankruptcy to confirm decision by trustee to object to discharge from bankruptcy – trustee withdrew objection to discharge from bankruptcy before application heard by tribunal – application dismissed as frivolous or vexatious because (1) objection was deemed by Bankruptcy Act 1975 (Cth) never to have been made; and (2) applicant had been discharged from bankruptcy on trustee withdrawing his objection.
Bankruptcy Act 1966 (Cth), s 149A(3)
REASONS FOR DECISION
2 April 2007 Deputy President D G Jarvis 1. The applicant, Patrick Farnan, was made bankrupt on 3 August 2001 by a creditor’s petition.
2. On 30 July 2004 Mr Farnan’s trustee lodged a notice of objection to Mr Farnan’s discharge from bankruptcy. Mr Farnan lodged an application with the Inspector-General in Bankruptcy for review of the trustee’s objection. The Inspector-General confirmed the trustee’s decision to lodge the objection in a reviewable decision dated 13 August 2004.
3. The applicant has applied to this tribunal for review of the Inspector-General’s decision.
4. On 16 February 2007, the trustee withdrew his objection to Mr Farnan’s discharge from bankruptcy. This is confirmed by an extract from the National Personal Insolvency Index, which records that the trustee’s objection was withdrawn on 16 February 2007, and that Mr Farnan’s bankruptcy ended on that date in consequence of “Discharged by Law”.
Issue Before The Tribunal
5. Following Mr Farnan’s discharge from bankruptcy as a result of the withdrawal of the trustee’s objection, the respondent applied to dismiss the within proceedings pursuant to s 42B(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the “AAT Act”), on the grounds that the proceedings will be of no practical utility. Mr Farnan opposed this application.
Legislative Scheme
6. Division 2 of Part VI of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”) provides for discharge from bankruptcy by operation of law. I will now refer to the provisions of this Division of the Bankruptcy Act that are relevant to a determination of the present dismissal application.
7. Section 149(4) of the Bankruptcy Act provides in effect that the bankrupt is discharged at the end of the period of three years from the date on which the bankrupt filed his or her statement of affairs.
8. However, under s 149A(1), if the trustee has lodged an objection to the discharge of a bankrupt, then unless the objection is withdrawn or cancelled, the period of the bankruptcy is in effect extended from the period from three years to either eight years or five years from (relevantly) the date on which the bankrupt filed his or her statement of affairs.
9. Section 149A(3) provides for the circumstance that the objection is withdrawn or cancelled. It provides as follows:
“(3) If the objection is withdrawn or cancelled:
(a) the objection is taken never to have been made; and
(b) if:
(i)the period specified in whichever of subsections 149(2), (3) and (4) applies in relation to the bankrupt has ended; and
(ii)no other objection against the discharge of the bankrupt is in effect;
the bankrupt is taken to be discharged under section 149 immediately the objection is withdrawn or cancelled.”
10. Sections 149B to 149H deal with the filing by a trustee of a written notice of objection to the discharge of the bankrupt.
11. Section 149J deals with the consequence of the trustee withdrawing the objection before the bankrupt is discharged. It provides as follows:
“149J Withdrawal of objection
(1)If at any time before a bankrupt is discharged the trustee withdraws the objection, the trustee must give the Official Receiver a notice of the withdrawal of the objection and give the bankrupt a copy of the notice.
(3)The withdrawal takes effect at the beginning of the day when details of a notice under subsection (1) are entered in the National Personal Insolvency Index.”
12. Sections 149K to 149P provide for an internal review by the Inspector-General in Bankruptcy of a decision of the trustee to file a notice of objection. Such review may occur on the Inspector-General’s own initiative, or at the request of the bankrupt.
13. Section 149N provides that the Inspector-General must cancel the objection if the Inspector-General is satisfied of one of a number of alternative matters, including that there is insufficient evidence to support the existence of the ground(s) of objection, or that the reasons given do not justify the making of the objection. Under s 149N(3), if the Inspector-General is not satisfied of the grounds that would lead to the cancellation of the objection, the Inspector-General must confirm the decision.
14. Section 149N(2) provides that the cancellation of an objection does not take effect until one of two alternative dates. It provides as follows:
“(2) The cancellation does not take effect until:
(a)the end of the period within which an application may be made to the Administrative Appeals Tribunal for the review of the decision of the Inspector-General; or
(b)if such an application is made—the decision of the Tribunal is given.”
Consideration
15. By virtue of s 149(4) of the Bankruptcy Act, Mr Farnan would, in the absence of an objection, have been discharged from bankruptcy at the end of three years from the date on which he filed his statement of affairs. However, because the trustee had lodged a notice of objection to the discharge from bankruptcy, the discharge from his bankruptcy was, by virtue of ss 149A(2)(a)(ii) and 149A(2)(b)(ii), extended until five years from the date on which he filed his statement of affairs (unless the objection was withdrawn in the meantime).
16. As I have said, the trustee withdrew his objection on 16 February 2007. In those circumstances, by virtue of s 149A(3) of the Bankruptcy Act, the objection was deemed never to have been made, and Mr Farnan was deemed to have been discharged under s 149 of the Bankruptcy Act immediately the objection was withdrawn.
17. Under s 43(1) of the AAT Act, this tribunal may exercise, for the purpose of reviewing a decision, all the powers and discretions that are conferred by the relevant enactment on the person who made the decision, and stands in the shoes of that person: Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139 at 143. In this case, that person was the Inspector-General in Bankruptcy. The Inspector-General’s powers under s 149N were either to cancel the objection or to confirm the decision to object.
18. If the Inspector-General had decided to cancel the objection to Mr Farnan’s discharge, then because an application had been made to this tribunal for review of the Inspector-General’s decision, the cancellation would have not taken effect until the decision of this tribunal (exercising the powers of the Inspector-General, as contemplated by s 43(1) of the AAT Act) had been given (s 149N(2)(b)). However, in the present matter, the trustee withdrew the objection, and Mr Farnan was thereby discharged from bankruptcy, before the tribunal had decided the within proceedings.
19. Subsection 42B(1) of the AAT Act provides in effect that this tribunal may dismiss an application for review if it is satisfied that the application is frivolous or vexatious. It has been held that that section extends to circumstances where the determination by this tribunal of an application for review would be of no practical utility (see for example Re Williams and Australian Electoral Commission (1995) 38 ALD 366; Re Brian Reddish and Civil Aviation Safety Authority [1999] AATA 721 at [33]). It has also been held that litigation may properly be regarded as vexatious if, irrespective of the motive of the litigant, the proceedings are so obviously untenable or manifestly groundless as to be utterly hopeless (see Attorney-General v Wentworth (1988) 14 NSWLR 481 at 491).
20. In Fearnley v Australian Fisheries Management Authority [2006] FCAFC 3, Emmett J referred to the procedure which this tribunal should adopt when an application for dismissal under s 42B(1) of the AAT Act is made by a respondent. His Honour said, at [98]:
“[i]t is a matter for the applicant to adduce before the Tribunal, on the hearing of such an application, all such evidence as the applicant wishes to have before the Tribunal, to resist the assertion that the proceeding is or has become frivolous.”
His Honour went on to reject an argument that the applicant need do no more than demonstrate an arguable or prima facie case in answer to an application for dismissal under s 42B(1).
21. When the Inspector-General’s application first came before me, I issued directions requiring the respondent to file and serve an outline of its submissions in support of its application, and requiring Mr Farnan to respond to those submissions. I made these directions so that Mr Farnan, who was unrepresented, would understand the basis of the respondent’s application, and have an opportunity to consider his position and to place before me any submissions or information that would indicate that the continuation of the proceedings would be of some practical utility.
22. In his written submissions, Mr Farnan contended that the date of discharge should not be 16 February 2007, but should be 4 August 2004. His written submissions then proceeded:
“… it should be noted that the original objection is flawed and not contested by the Inspector General in Bankruptcy as of the 16th February 2007.
The trustee by way of writing to the Official Receiver, withdrawing the objection, made on the 30th of July 2004, knew the matter was before the court.
The trustee and the Official Receiver are in contempt of the proceedings, by withdrawing the objection. The court, needs to order the backdate the original objection, to the 4th August, 2004 and change the Grounds as insufficient – defective advice by the trustee to the Inspector General for the original objection.”
23. During the hearing on the dismissal application, Mr Farnan further explained that he had previously been unable to obtain past group certificates from his employer, that the trustee was aware of this, and that the trustee had taken steps himself to obtain the necessary information from Mr Farnan’s employer. Mr Farnan produced a copy of a letter dated 30 July 2004 to him from the trustee confirming this. As I understand it, Mr Farnan contends that if the Inspector-General had been informed of all the relevant facts at the time, he would have decided to cancel the trustee’s objection. Mr Farnan therefore contended that notwithstanding that he had been discharged from bankruptcy prior to the hearing of the dismissal application I should nevertheless review the Inspector-General’s decision of 13 August 2004, set it aside, and cancel the objection.
24. This tribunal does not have an inherent general jurisdiction to review or determine the validity of actions taken by the Commonwealth or officers or agencies of the Commonwealth. Its jurisdiction must be derived from another enactment that specifically confers jurisdiction on this tribunal. This was made clear many years ago in Re Laird and Australian Broadcasting Tribunal (AAT 78/122, 10 May 1979), where President Davies J considered an application relating to the jurisdiction of this tribunal to review a decision of the Australian Broadcasting Tribunal. His Honour said:
“An application for review may not be made to the Administrative Appeals Tribunal unless an enactment specifically empowers the making of that application. An application so authorised is an application made under that enactment and thus an application to which s 25(4) of the Administrative Appeals Tribunal Act empowers the Administrative Appeals Tribunal to adjudge.”
25. As explained above, under the relevant provisions of the Bankruptcy Act, the powers of this tribunal, standing in the shoes of the Inspector-General, are limited to either cancelling the trustee’s notice of objection, or confirming the trustee’s decision to object to the discharge from bankruptcy. Under s 149(3)(a) of the Bankruptcy Act, if the objection is withdrawn, the objection is “taken never to have been made”. As a result, the tribunal is unable to exercise the function contemplated by s 149N of the Bankruptcy Act conferring jurisdiction on it, because there is no objection which the tribunal can cancel or affirm. The proceedings before me are accordingly obviously untenable, and therefore vexatious: Attorney-General v Wentworth (supra).
26. Quite apart from the vacuum arising from the deeming provisions of s 149A(3)(a) referred to in the preceding paragraph, Mr Farnan has already been discharged from bankruptcy by virtue of s 149A(3)(b), because the trustee has previously withdrawn his objection. Any decision by this tribunal would accordingly be of no practical utility, thus also enlivening the discretion conferred on the tribunal by s 42B(1) of the AAT Act to dismiss the application for review.
27. In any event, even if notwithstanding the above issues the tribunal were to accept Mr Farnan’s contentions and decide that the objection should be cancelled, the cancellation would not take effect until the tribunal’s decision was given (s 149N(2)(b) of the Bankruptcy Act). That date would be subsequent to Mr Farnan’s discharge from bankruptcy by virtue of the trustee having withdrawn the notice of objection. Once again, the tribunal’s decision would be of no practical utility.
28. I am mindful that there is power in s 43(6) of the AAT Act for this tribunal to order that its decision should be deemed to have had effect from some other date. However, the Bankruptcy Act makes express provision for the date of the cancellation in s 149N(2)(b). Section 43(6) of the AAT Act is a general section, and in my opinion it would not apply in the face of a specific section such as s 149N(2)(b) of the Bankruptcy Act. I refer in this regard to Re Secretary, Department of Employment and Workplace Relations and Mitchell (2006) 92 ALD 201 at [58] and the principle of statutory interpretation that a specific provision will override an inconsistent general provision, especially where (as is the case in the present matter) the specific section was enacted after the enactment of the general section. I accordingly conclude that (once again, quite apart from the matters mentioned above) I would not be able to backdate the effective date of my decision in the face of the specific provisions of s 149N(2)(b) of the Bankruptcy Act.
29. In summary, I have no power, following the withdrawal of the objection, to exercise the jurisdiction that would otherwise have been available to this tribunal, and even if I had such power, I have no power to backdate my decision. Alternatively, the determination of the application would be of no practical utility, having regard to the fact that the applicant has previously been discharged from bankruptcy.
30. In all of the circumstances, I consider that it is appropriate to exercise the discretion conferred by s 42B(1) of the AAT Act to dismiss the application.
Decision
31. The application is dismissed pursuant to s 42B(1) of the Administrative Appeals Tribunal Act 1975 (Cth).
I certify that the 31 preceding paragraphs are
a true copy of the reasons for the decision
herein of Deputy President D G JarvisSigned: .....................................................................................
L Wunderer AssociateDate/s of Hearing 21 February 2007
Date of Decision 2 April 2007
Applicant In person
Counsel for the Respondent Mr D Uglesic
Solicitor for the Respondent Australian Government Solicitor
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