Fletcher v George - [2008] FMCA 1624

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FLETCHER v GEORGE

[2008] FMCA 1624

BANKRUPTCY – Undischarged bankrupt – trustee seeking a search warrant to search the bankrupt’s property and seize assets – ex parte application – serious allegations raised by the trustee against the bankrupt.

Bankruptcy Act 1901 (Cth)
Federal Magistrates Court Rules

Applicant:

WILLIAM JOHN FLETCHER AS TRUSTEE OF THE BANKRUPT ESTATE OF LAUREN KAY GEORGE

Respondent:

LAUREN KAY GEORGE

File Number:

BRG 709 of 2008

Judgment of:

Burnett FM

Hearing date:

29 October 2008

Date of Last Submission:

29 October 2008

Delivered at:

Brisbane

Delivered on:

29 October 2008

REPRESENTATION

Solicitors for the Applicant:

Coleman Webb Lawyers

The Respondent appeared on her own behalf

ORDERS

That a search warrant issue.
The application be adjourned to 9.30am on 5 November 2008.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 709 of 2008

WILLIAM JOHN FLETCHER AS TRUSTEE OF THE BANKRUPT ESTATE OF LAUREN KAY GEORGE

Applicant

And

LAUREN KAY GEORGE

Respondent

REASONS FOR JUDGMENT

In this application the respondent became an undischarged bankrupt by her own petition presented on 24 February 2006. The applicant today is by her trustee, William John Fletcher. The trustee was appointed on 31 March 2006. He seeks three orders, they being first that a search warrant be issued in accordance with s.130 of the Bankruptcy Act to allow the trustee and his agents to enter upon the bankrupt's premises situate at 130 Landing Place, Moggill, in the State of Queensland, for the purpose of searching those premises to obtain documents and property forming part of the bankrupt estate.
Second, that the applicant be permitted to seize all computers and all filing cabinets at the premises for the purpose of examining them and their contents to ascertain whether they contain any documents or information that the bankrupt has withheld from the applicant.
And third, that the applicant be permitted to seize a vehicle, being a Toyota Landcruiser wagon with the licence place 590-FXR, BIN number JT11UJA509019411(B class), engine number 1FZ0444996, and a black Hanoverian mare known as Stella Maris and any other livestock or assets that the applicant has reason to believe form part of the bankrupt's estate.
In essence, the applicant seeks orders to search the bankrupt's property and seize assets.
The application is brought ex parte. There is no rule within the Federal Magistrates' Court Rules which permits such an application however by operation of r.1.05 any such deficiency can be addressed by reference to the rules of the Federal Court. Insofar as they are relevant, O.25B deals with search orders. It is worthy of note at this time that the context in which O.25B applies is the context of what is customarily known as an Anton Pillar order.
For reasons that will become apparent in a moment it is worth noting that in those instances commonly applications are brought by solicitors seeking orders ex parte to search and seize material, oftentimes in circumstances where the search and seizure will not be supervised by any independent officer.
I make that observation because I propose to dispense with the strict requirements of O.25B insofar as it provides by r.6 for the appointment of an Independent Solicitor, because in this instance the warrant is to be executed by the police and/or a Sheriff. In my view, the presence of those law officers obviates the need to have an Independent Solicitor appointed to oversee the execution of the warrant and in those circumstances there will be no prejudice or injustice occasioned to the respondent in that instance.
The issue of the warrant itself is governed by s.130 of the Bankruptcy Act which provides, in broad terms, that the trustee may apply for the issue of a warrant if the trustee has reasonable grounds for suspecting there is in any premises or on any property being property of the bankrupt property that may be connected with or related to the bankrupt's examinable affairs, including books relevant to any of the bankrupt's examinable affairs. In this case the property which is the subject of consideration is livestock, a Landcruiser motor vehicle and documentary material, including computers.
In this instance the trustee, Mr Fletcher, has sworn an affidavit where he outlines with some particularity the basis for his belief and I will address those matters shortly. If I am satisfied of those matters I am then authorised to issue a warrant authorising a constable, together with any other person named in the warrant, to enter onto the premises, to search the premises, to take relevant property and to deliver that property to the trustee.
However, I am not permitted to issue a warrant in terms of s.130 unless there is an affidavit furnished to me setting out the grounds – in this case there is, for reasons I will elaborate on in a short time – that the applicant for the warrant in this case, Mr Fletcher, has given me such further information as I may require – but in this case I do not think there is any such need and so none is requested in this instance; and finally, that I am satisfied there are reasonable grounds for issuing the warrant. To that end I am required to set out which of the grounds specified in the affidavit I have relied upon to justify the issue of a warrant.
There are a number of matters raised in this affidavit. It is fair to say that generally the affidavit raises very serious allegations by the trustee against the bankrupt. By way of background, a history of this application demonstrates that there has been much recalcitrance on the part of the bankrupt. She has entered into arrangements designed to avoid creditors and others to whom she might be indebted. In this regard I particularly note her former husband in respect of whom she has effected a property settlement in circumstances which may lead to the prospect of that settlement being set aside if indeed the allegations made by Mr Fletcher have any substance.
When evidence has been collected to demonstrate her position is untenable she has been forced into compromise. Perhaps the best illustration of this is the deed which she executed concerning the Moggill property on 19 February 2008. Without expanding upon the particulars of that transaction, the Moggill property, which is indeed the property the subject of the warrant, was a property which was transferred by her to her former brother-in-law in what can only be seen as a sham transaction for less than its proper consideration. When that property became the subject of matrimonial proceedings between the bankrupt's sister and the bankrupt's former brother-in-law she sought to intervene in that couple’s matrimonial proceedings to protect her interest in the property. It is noted that she now claims that property interest is the subject of a trust to a third party.
It is to be noted that she adopted inconsistent positions in relation to these matters and that when her position was undermined by third parties in relation to such transactions those third parties were not content to hold fast to their support of her claims and those transactions too have been the subject of recision.
Her recalcitrance, I think, has been particularly demonstrated by her approach particularly to the question of the Moggill property being held on trust for her son. She has adopted inconsistent positions. To the trustee she has maintained the position that she holds the property on trust for her son, but to the Family Court in proceedings which were agitated some three years ago she claimed an interest in that property in her own right.
There is certainly no suggestion in the judgment by Barry J that the property at 130 Landing Place, Moggill, was being held other than as one in respect of which she had a freehold interest and was beneficially entitled, together with her former spouse, to the whole of the estate. No issue of trust was ever contended. I note that judgment was premised upon that presumption.
Later that property was transferred and a purported trust was created. The transfer was done at a significant undervalue during the relation back period for such a transaction. That, as I have already noted, led to the compromise arrangement which was struck on 19 February this year. But in any event, that was merely one illustration of a number advanced by Mr Fletcher of circumstances where it can be seen the bankrupt adopts inconsistent positions in relation to certain assets.
I note Mr Fletcher's other general complaints concerning her general level of co-operation with him. In that regard, for instance, he has noted her approach to the caveat proceedings over, again, the Moggill property, and her approach to negotiations in respect of those proceedings which suggest a design on her part to frustrate the trustee's performance of his duties and a general failure by her to co-operate in respect of matters, including disclosure, which are relevant to that transaction and other transactions in her estate.
That perhaps is also highlighted by the specific claims made by the applicant today on the subject of a warrant. Those claims themselves support contentions on the part of the trustee that there has been a woeful and inadequate disclosure by the bankrupt inconsistent with her duties under the Bankruptcy Act.
Concerning the specific issues, the first concerns the Toyota, the horse and the livestock. The first point to be made about these matters particularly the Toyota and the horse, is the evidence of the sham transactions resulting in a transfer of that property initially from the bankrupt to her sister, who in turn has recanted on those transactions and transferred that property to the trustee. The trustee is now lawfully entitled to that property.
I am satisfied from photographic evidence attached to Mr Fletcher's affidavit that the horses are indeed on the property at Moggill and given that the motor vehicle is a vehicle used personally by the bankrupt and that the bankrupt lives at the Moggill property, it is too expected that the vehicle is likely to be there.
So far as keys, safes, computers, message-taking machines and the contents thereof are concerned, again, it is clear from the evidence of Mr Fletcher, first by inference that the key would involve a key to that equipment and/or the motor vehicle, and insofar as that equipment would require keys it is apparent that the keys need to be produced to give effect to the warrant.
It is apparent that the bankrupt has facilities for the storage of documents and, one assumes, safes and filing cabinets - or filing cabinets would fall within the category of safes and other places for the keeping of documents. It is clear that she has a computer as she has recorded emails which are evidenced to or attached to Mr Fletcher's affidavit.
Further, Mr Fletcher has recorded in his affidavit instances of transactions involving the transfers of property which have not been disclosed. Given the respondent's employment history and background as a banker and bank manager, it is reasonable to expect that she will have retained records of these original transfers and that in the absence of any other place of employment or occupation by her it is likely that these documents are to be found in her residence.
In the circumstances, then, it seems, having regard to the affidavit of Mr Fletcher and the matters provided therein, it is, in my view, appropriate that a warrant issue.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Burnett FM

Associate: Beverley Schmidt

Date: 4 December 2008