Gibb v Australian Financial Security Authority

[2016] FCA 1264

FEDERAL COURT OF AUSTRALIA

Gibb v Australian Financial Security Authority [2016] FCA 1264

File number:	WAD 412 of 2016
Judge:	MCKERRACHER J
Date of judgment:	24 October 2016
Legislation:	Bankruptcy Act 1966 (Cth) s 254(3)
Date of hearing:	24 October 2016
Registry:	Western Australia
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Category:	No Catchwords
Number of paragraphs:	9
Counsel for the Applicant:	The Applicant appeared in person
Counsel for the Respondent:	The Respondent did not appear

ORDERS

WAD 412 of 2016

BETWEEN:

LINDA DOROTHY GIBB

Applicant

AND:

AUSTRALIAN FINANCIAL SECURITY AUTHORITY

Respondent

JUDGE:	MCKERRACHER J
DATE OF ORDER:	24 OCTOBER 2016

THE COURT ORDERS THAT:

1.Under s 254(3) of the Bankruptcy Act 1966 (Cth), the Applicant is entitled to the sum of $110,398, being monies paid to the Commonwealth by the trustee administering the Applicant’s former bankrupt estate.

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

REASONS FOR JUDGMENT
REVISED FROM THE TRANSCRIPT

MCKERRACHER J:

1. Ms Gibb seeks this morning a declaration under s 254(3) of the Bankruptcy Act 1966 (Cth) that she is a person entitled to moneys that have been paid to the Commonwealth in relation to her former bankrupt estate. Ms Gibb relies on an application and a short affidavit filed on 8 September 2016, having been sworn on 12 July 2016.

2. While there is rather limited evidence before the Court in that material, the background to the proceeding is that there was a building dispute in which Ms Gibb was involved.  She was made bankrupt at a point in time which is somewhat imprecise, but it was at least 12 years ago.  At around that time, she moved her residency to New Zealand.  I infer that when funds became available for distribution from the bankrupt estate, there was some complication or difficulty in making those available to her.  As I say, the precise evidence is slim. 

3. Ms Gibb subsequently received a letter dated 16 February 2007 from what was then the Insolvency and Trustee Service of Australia.  It followed a telephone conversation of the previous day regarding what were described as ‘missing’ funds.  The letter advised that the computer records of the Department indicated in October 2004, in accordance with s 254(2) or s 254(2A), Mr Posner, the trustee of the bankrupt estate for Ms Gibb, paid $110,000 into a Commonwealth account called the ‘Consolidated Revenue Fund’ or ‘Unclaimed Dividends or Moneys’.  The Department provided Ms Gibb with material to explain what was involved as a matter of law in relation to that payment.

   THE STATUTORY FRAMEWORK

4. It is necessary to say something about the statutory regime.  The relevant provision of the Bankruptcy Act  is as follows:

   254     Payment of unclaimed moneys to the Commonwealth

   (1)       In this section, trustee means:

   (a)a trustee of the estate of a bankrupt; or

   (aa)the administrator of a debt agreement; or

   (b)a trustee of a personal insolvency agreement; or

   (c)a trustee of a composition or a scheme of arrangement; or

   (d)a trustee of the estate of a deceased person in respect of which an order has been made under Part XI of this Act;

   and includes the Official Trustee.

   (2)       Where a trustee has under his or her control:

   (a)any dividends or other moneys that have remained unclaimed for a period exceeding 6 months; or

   (b)any moneys that it is proposed not to distribute or pay to any person;

   he or she shall forthwith pay those moneys to the Commonwealth.

   (2A)     Where:

   (a)the Court has, after the presentation of a creditor’s petition against a debtor, directed the Official Trustee, an Official Receiver or a registered trustee to take control of the property of the debtor;

   (b)the petition has been withdrawn or dismissed;

   (c)the Official Trustee, Official Receiver or registered trustee, as the case may be, has moneys under its control in pursuance of the direction; and

   (d)it is not reasonably practicable to pay those moneys to the person entitled to them;

   the Official Trustee, Official Receiver or registered trustee, as the case may be, shall pay those moneys to the Commonwealth.

   (3)A person who claims to be entitled to any moneys that have been paid to the Commonwealth by a trustee in pursuance of subsection (2) or (2A) may apply to the Court for an order under this subsection declaring him or her to be so entitled and, if the Court is satisfied that the applicant is entitled to those moneys or a part of those moneys, it may make an order accordingly.

   (4)Upon receipt by the Official Receiver of an office copy of an order under subsection (3), the Official Receiver shall pay to the person in whose favour the order was made the amount specified in the order out of moneys lawfully available for the purpose.

5. The section sets out the authority and process by which funds can be paid to the Commonwealth by a trustee, and how those funds can be returned after payment to the Commonwealth.  There are two relevant circumstances under s 254(2).  The first, under subs 254(2)(a) is where a practitioner holds unclaimed dividends or other moneys for more than six months.  And the second is, under subs 254(2)(b), where funds are held and a decision made not to pay them.

6. The first provision would apply particularly in situations where the person entitled to the funds has been identified but cannot be located or contacted.  There may be circumstances where a creditor or payee is entitled to payment but, for some reason, the address is unknown or a payment has been returned unclaimed or a cheque not presented.  In either event, after certain steps have been taken, the statute provides for those funds to be paid into the Commonwealth revenue account in the manner described. 

   CONSIDERATION

7. Because there was some confusion about the underlying facts, and, in any event, in accordance with good practice, as I perceived it, at the case management hearing on 13 October 2016, I made orders requiring service of the application on the respondent, now known as Australian Financial Security Authority (AFSA), by email, with the matter listed for hearing today and a direction that the respondent advise the court of its view in relation to the application by last Friday.   

8. Service was obviously effected, the AFSA Official Receiver having responded by correspondence promptly on 14 October 2016 advising that she confirmed that an amount of $110,398 was received by the Commonwealth into the Consolidated Revenue Fund from the trustee administering Ms Gibb’s former bankrupt estate, and that the money was available to be paid to Ms Gibb pursuant to s 254(4) of the Bankruptcy Act, if the Court should so order.  The letter indicated that neither AFSA nor the Official Receiver would oppose the making of such an order.  The letter from the Official Receiver continued to explain that it was not an interest-bearing account. 

   CONCLUSION

9. Against that background, these events having been somewhat antique in nature, I am nonetheless satisfied that it has been established that Ms Gibb is entitled to the moneys paid to the Commonwealth by the trustee administering her bankrupt estate.  It is clear that the Court has power under the Federal Court of Australia Act 1976 (Cth) and under the Bankruptcy Act to make declarations in an appropriate case.  This is an appropriate case, and no other orders are sought.  I make the declaration. 

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate:

Dated:             25 October 2016