Gremmer and Inspector-General in Bankruptcy
[2011] AATA 368
•31 May 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 368
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/3935
GENERAL ADMINISTRATIVE DIVISION ) Re Mr Bernd Gremmer Applicant
And
Inspector-General in Bankruptcy
Respondent
DECISION
Tribunal M D Allen, Senior Member Date31 May 2011
PlaceSydney
Decision The Decision under Review is SET ASIDE as is the Objection to Discharge.
....................[sgd]....................
M D Allen, Senior Member
CATCHWORDS
BANKRUPTCY: Objection to Discharge. Special Ground did Bankrupt fail to comply with request to provide information about property, income or expected income. Failure not intentional. Effect of depressive illness. Objection decision set aside.
LEGISLATION
Bankruptcy Act 1966, S149C, 149D, 149N.
Social Security Act 1991, S94; Schedule 2B
CASES
Broadley v Inspector-General in Bankruptcy [2007] FMCA 1714
Wharton v Receiver in Bankruptcy [2000-2001] 107 FCR 28
Re Caruana and Inspector-General in Bankruptcy [2008] AATA 307
REASONS FOR DECISION
31 May 2011 M D Allen, Senior Member 1.By Application made 15 September 2010 the Applicant sought review of a decision by the Respondent to confirm an objection to his discharge from bankruptcy on a ground specified in paragraph 149D(1)(d) of the Bankruptcy Act 1966 (“BA”), namely that when requested in writing by the Trustee to provide written information about his property, income or expected income, the Applicant failed to comply with that request.
2.The effect of paragraph 149D(1)(d) BA is expanded by the operation of Regulation 7.01A of the Bankruptcy Regulations 1966 which states:
“For paragraph 149D(1)(d) of the Act, a bankrupt is taken to have failed to comply with a request to provide information if the bankrupt has provided information that is incomplete or inaccurate.”
3.Subsection 149Q(a) BA provides that an application may be made to the Administrative Appeals Tribunal for the review of a decision of the Inspector-General on the review of a decision of the Trustee to file a notice of objection.
4.In undertaking that review the Tribunal, standing in the shoes of the decision maker, is bound by section 149N BA which states:
(1) On a review of a decision, if the Inspector-General is satisfied that:
(a) the ground or grounds on which the objection was made was not a ground or were not grounds specified in subsection 149D(1) ; or
(b) there is insufficient evidence to support the existence of the ground or grounds of objection; or
(c) the reasons given for objecting on that ground or those grounds do not justify the making of the objection; or
(d) a previous objection that was made on that ground or those grounds, or on grounds that included that ground or those grounds, was cancelled;
the Inspector-General must cancel the objection.
(1A) An objection must not be cancelled under subsection (1) if:
(a) the objection specifies at least one special ground; and
(b) there is sufficient evidence to support the existence of at least one special ground specified in the objection; and
(c) the bankrupt fails to establish that the bankrupt had a reasonable excuse for the conduct or failure that constituted the special ground.
For this purpose, special ground means a ground specified in paragraph 149D(1)(ab), (d), (da), (e), (f), (g), (h), (ha), (ia), (k) or (ma).
(1B) In applying subsection (1A), no notice is to be taken of any conduct of the bankrupt after the time when the ground concerned first commenced to exist.
(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.
(3) If the Inspector-General is not satisfied as mentioned in subsection (1), the Inspector-General must confirm the decision.
5.The practical effect of section 149 BA was succinctly explained by Senior Member Friedman in Re Caruana and Inspector-General in Bankruptcy [2008] AATA 307, namely:
“In order to succeed in obtaining a cancellation of a special ground of objection Mr Caruana must show at least one of the conditions in s149N(1) of the Act applies and that the circumstances in s194N(1A) of the Act do not apply…”
6.As the ground of objection to the Applicant’s discharge from bankruptcy, namely pursuant to paragraph 149D(1)(d) BA is a so called “special ground” the Trustee was not required to state the reasons he objected to the discharge - see Ss149C(1A).
7.The Applicant was made a bankrupt on a creditor’s petition on 11 February 2008. At around the same time the company through which he conducted his business was placed into liquidation.
8.On 28 March 2008 the Applicant filed a Statement of Affairs with the Official Receiver in Bankruptcy.
9.By letter dated 19 March 2009 the Applicant’s Trustee in Bankruptcy forwarded to the Applicant an income questionnaire requiring information and documentation within 21 days. No reply was received according to the Trustee.
10.A further request was made to the Applicant to complete the income questionnaire on 3 July 2009, and again on 19 January 2010. A request had also been made to the Applicant’s solicitor on 19 January 2010. An unsigned response was received by the Trustee on or about 22 March 2010.
11.A copy of the document provided by the Applicant to his Trustee is at document T13 of the documents prepared for the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. I note that the document is unsigned and although the Applicant discloses that he is employed his rate of remuneration is not disclosed.
12.During the course of the proceedings before me I found the Applicant’s evidence to be both confusing and contradictory. A large part of the evidence of both the Applicant and his sister concerned their difficulties in dealing with the Trustee and actions taken by the Trustee, which they regarded an inimical to the interests of the Applicant.
13.Subsequent to the decision of the Respondent, the Applicant has produced a signed copy of an income questionnaire for the period 11 February 2008 to 10 February 2009, which document bears the date 04.04.2009.
14.According to the Applicant, he utilized the assistance of his accountant to prepare the original of this document and he then took the original from his accountant’s office and posted it to the Trustee.
15.That the Applicant’s accountant assisted in the preparation of such a document is corroborated by a letter from that firm of accountants addressed to the Tribunal and dated 11 February 2011 (see document ST13), which states inter alia:
“We act in a professional capacity for and on behalf of the abovementioned
…The Trustee cited his reason for an unfavourable submission was on the grounds that Bernd Gremmer failed to submit a duly completed INCOME QUESTIONNAIRE to the Trustee by the prescribed date of 10 April 2009.
We confirm our office assisted Bernd with the completion of such a requisition.
… We enclose herewith a file copy of the said document for your information.”
16.I accept, as submitted by the Respondent, that where in that letter the accountants referred to the Applicant forwarding the document, that is a matter regarding which they have no actual knowledge. I do however accept the Applicant’s evidence that the accountants were able to produce a copy of the said questionnaire from their files.
17.Cross examined the Applicant conceded that he had not included in the questionnaire the income received by him when employed by a firm of road work contractors.
18.For his part the Trustee denies ever receiving the completed income questionnaire. I find that to be so, as if the document had been received then there would have been no need for the follow up letters requiring completion of the document.
19.Unfortunately for the Applicant, he has no proof that he posted the said document. All I can deduce from the material before me is that the income questionnaire requireded by the Trustee was completed by the Applicant with the help of his accountant but the document was never posted.
20.The Applicant has been suffering from depression since at least 2007. Annexed to the Applicant’s Affidavit (Exhibit A1) is a copy of a Centrelink document signed by the Applicant’s General Practitioner (“GP”) stating that the Applicant suffered from depression. Annexure B to the said Affidavit is a report from the Applicant’s GP which reads:
“This is to satisfy that Bernd Gremmer attended Charlestown Medical and Dental Centre on the 24 Sep 2009. I have reviewed his medical records and advise that he attended this surgery on 06 Aug 07 with a significant depressive illness. He was treated at that time and on subsequent occasions with anti-depressant medications. He has partially improved but referral for psychiatric review may be required in the future.”
21.The Applicant’s sister also gave evidence of the Applicant being severely incapacitated by depression. The Applicant also referred to his depression and how it had affected his capacity to function and more importantly to conduct his business affairs.
22.Significantly, the Applicant said that even today he is affected, and he finds it hard to open a letter and sometimes he does not do “things” which are required, not being a deliberate evasion but because he just cannot cope. That inability to cope explains to my mind why the Applicant failed to deal with follow up letters from the Trustee.
23.Given the above evidence, I accept that even with the best of intentions the Applicant somehow failed to attend to the posting of the questionnaire to the Trustee and then because of his mental state was incapable of dealing with the further correspondence from the Trustee.
24.In Broadley v Inspector-General in Bankruptcy [2007] FMCA 1714, Lucev FM at paragraph 25 said of paragraph 149D(1)(d) BA:
“A further reason that the AAT erred in law is related to the nature of s149D(1)(d) of the Bankruptcy Act. It is a special ground of objection. Special grounds of objection ‘are directed at deliberate actions by the bankrupt to defeat creditors or to hinder the Trustee’s administration’. The AAT expressly found that the act’s constituting the alleged failure to comply with the Trustee’s requests were:
(a)not intentional; and
(b)the result of forgetfulness and a lack of awareness by Mr Broadley.
Having regard to the legislative intention behind s149(1)(d) (sic) being a special ground, the facts found by the AAT cannot, as a matter of law, give rise to a failure by Mr Broadley to comply with the Trustee’s request because the actions of Mr Broadley were not deliberate.”
25.To my mind similar reasoning applies here. I am satisfied that the Applicant fully intended to comply with the Trustee’s request but that his diagnosed depressive state frustrated his ability to fully comply.
26.The Respondent submitted that given the Applicant’s ability to instruct solicitors and accountants he was not so debilitated as to be unable to comply with requests from his Trustee. In my experience in this Tribunal, particularly in the Veterans’ and Workers Compensation divisions, persons with a depressive illness can function to different levels at different times, and more particularly can function better in situations they regard as non-threatening, for example consulting his own accountants, as opposed to matters they regard as threatening, for example demands from a Trustee in Bankruptcy already perceived to be hostile.
27.In passing I would only add, in respect to submissions raised in the Respondent’s Statement of Facts and Contentions, the Applicant would not be entitled to a Disability Support Pension (“DSP”) as his depressive state could not be said to be fully treated and stabilized so as to be capable of obtaining an impairment rating under Schedule 2B to the Social Security Act 1991 (“SA”). If the Applicant’s depression was incapable of being rated, then he would not qualify for DSP as his incapacity would not attract 20 points or more under the impairment tables in Schedule 2B – see section 94 SA.
28.Whereas it may be argued that the Applicant did not provide full information as to the income he received from Yore Contractors he did disclose the existence of that employer and it was apparently with little effort that the Trustee was able to contact this firm and ascertain that the Applicant was being paid $500.00 per week (see paragraph 22 of Exhibit R2). As Weinberg J (as then then was) pointed out in Wharton v Official Receiver in Bankruptcy [2000-2001] 107 FCR 28 at 41 that unless s149A BA is construed in a sensible manner it is capable of operating oppressively and that:
“Section 149D(1)(d) must be construed in the light of the requirement in s149B(2)(b) that the Trustee must believe that the filing of a Notice of Objection is the only way to induce the bankrupt to discharge his duties under the Act. It is plainly a course of last resort.”
29.I am satisfied that:
(a)The objection specified a special ground;
(b)The evidence is such that the special ground does not exist as the failure to provide written information about his property, income and expected income that was not incomplete or inaccurate, was not deliberate on the Applicant’s part but as a result of his diagnosed depressive illness;
(c)The depressive illness established the presence of a reasonable excuse.
30.For the above reasons the Decision under Review is set aside as is the Objection to Discharge.
I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.
Signed: ..............[sgd]........................
K. Lynch, AssociateDate of Hearing 13 May 2011
Date of Decision 31 May 2011
Representative for the Applicant Mr B Gremmer (self)
Representative for the Respondent Mr T HowesInsolvency & Trustee Service Australia (ITSA)
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