Fletcher v George (No.4)

[2008] FMCA 1627

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FLETCHER v GEORGE (No.4) [2008] FMCA 1627

BANKRUPTCY – Undischarged bankrupt – trustee previously sought search and seizure warrant – third appearance before the court – significant deal of controversy about the ownership of chattels – intentionally seeking to conceal and remove two chattels which are the subject of contention in this application – refusal to answer questions in relation to the two chattels – respondent remanded to custody.

Bankruptcy Act 1901 (Cth)

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: 3 November 2008

Date of Last Submission: 3 November 2008

Delivered at: Brisbane

Delivered on: 3 November 2008

REPRESENTATION

Counsel for the Applicant: Mr Coulsen  

Solicitors for the Applicant: Coleman Webb Lawyers

The Respondent appeared on her own behalf

ORDERS

1. That the Respondent be remanded to the Brisbane Watch House and be returned to the Court at 10.00am on 4 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

1. This is the third occasion this application has come before me.  It came before me on Thursday for the issue of a warrant which was issued in relation to property alleged to be the property of the bankrupt.  There was an extensive affidavit filed by William John Fletcher, the trustee in bankruptcy for the bankrupt which details significant history in relation to the bankrupt's affairs.

2. I gave reasons in relation to the issue of a warrant and I will not re-state them today.  The warrant was executed and when it came back before me on Friday morning, exhibit 4 was placed before me.

3. Exhibit 4 contained a series of photographs depicting the goods and chattels that were found upon the property.  There was on the property quite a lot of silverware and other valuable furnishings, antiques, jewellery and other equipment, particularly of an equestrian nature, artwork and so forth.  There was also a list which is exhibit 2 of an inventory of items removed which from even a layman's perspective demonstrates a significant body of material by way of chattels and the like on the bankrupt's property.

4. In addition in exhibit 3 there were attached a significant number of valuations which were uncovered at the bankrupt's property dealing with the value of jewellery and the like, some of which has been recovered according to the bankrupt, some of which is still unaccounted for.  Perhaps most significantly there were two horses, a vehicle and a horse float which were the subject of the proposed warrant and they indeed were the subject of evidence contained in the affidavit of Mr Fletcher. 

5. Now it is fair at the outset to say that there is a significant deal of controversy about the ownership of all of these particular chattels.  The bankrupt contends that the chattels have been settled upon some trust or various trusts.  The trustee contends that if indeed trusts were created then the settlements are void or voidable, being settlements effected with a view to defeating creditors or alternatively simply they are contrivances on the part of the bankrupt in order to put the chattels beyond the claim of the trustee in bankruptcy.

6. In any event it is apparent that in respect of at least two of the assets that are in issue, that is the two horses, the trustee has sought the Court orally today to permit it to make enquiries of the bankrupt about those particular matters.  The bankrupt was cross-examined this afternoon in particular because the trustee is concerned about the bankrupt having sought to conceal or remove property with a view to preventing or delaying the possession of it being taken under the Act.  Evidence relied up9on by the trustee supports the position that they are the bankrupt’s assets.  The bankrupt denies ownership.

7. It is apparent from the bankrupt's evidence that she knows or has it within her power to inform the Court of the whereabouts of the two horses, the first being the horse Stella Maris and the second being a horse that was formerly known as Chicago and is now known as Cabernet.

8. In respect of Stella Maris she says she does not know the whereabouts of the horse but she has it within her power to enquire of the person who took the horse from her possession to ascertain its whereabouts.  In respect of the horse Cabernet she knows where it is but she simply refuses to reveal that matter to the Court.

9. The Court has the power in circumstances where a debtor against whom a bankruptcy notice has been issued or a petition has been presented, and this is certainly the case here, where the debtor or in this case a bankrupt has concealed or removed or is about to conceal or remove any of his or her property with a view to preventing or delaying possession of it being taken up under the Act, the Court may issue a warrant for the arrest of the debtor or bankrupt as the case may be, and his committal to gaol as the Court appoints until the Court otherwise orders and may by the same order, order that the property and books and possessions of the debtor or the bankrupt be seized and delivered into the custody of such a person as the Court appoints.

10. In Australian Insolvency and Bankruptcy Law, second edition by Thomasick and Whiteford the authors note concerning these matters, at para.15.4, talking generally about absconding debtors but going on to talk generally about recalcitrant debtors, that the Court has the same power where a bankrupt has concealed or without permission of the trustee removed any property, where the bankrupt has without good cause neglected or failed to comply with an order of the Court, or any obligation under the Act.

11. In this case the bankrupt has been directed to answer two questions which she point blank refuses to answer.  In my view the circumstances of this case would ordinarily justify the issue of a warrant for the recovery of the chattels as there is a good basis to believe that the bankrupt, by the conduct of her affairs, has engaged in deceitful conduct which in this case might be not only could, but is likely to, lead to efforts on her part to conceal or remove the property.

12. The title of the goods is in issue.  She has been party to the removal. She knows who took the goods but not only that, she has a history of poor form in relation to these sorts of transactions.  One only needs to look to the judgment of Barry J in the Family Court proceedings where at p.12 in para.41 of his Honour's judgment, dealing with an issue in dispute there, he drew particularly adverse inferences about the manner in which the bankrupt conducted herself.  In that instance he found that in relation to a certain transaction the bankrupt received $125,000 from the sale of property which she then claimed (but he says at the worst that version was false), and she in fact received a sum of $66,000 as referred to in exhibit 19.  At best, he described her as being a willing party to a fraud on the revenue of South Australia.  He was not prepared to accept that the solicitors involved would have been complicit to any such fraud.

13. In any event, I am persuaded that in this case the bankrupt is intentionally seeking to conceal and remove two chattels which are the subject of contention in this application and so in my view it is appropriate that until I get an answer to these two questions that were asked this afternoon, you be held over.

14. I propose to issue a warrant directing you to be held at the Brisbane watch-house and we will return tomorrow morning at 10 o'clock.  In the meantime you can consider whether you wish to answer the questions.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Burnett FM

Associate:      Beverley Schmidt

Date:              4 December 2008