Jack and Inspector-General in Bankruptcy - [2022] AATA 3176

Jack and Inspector-General in Bankruptcy [2022] AATA 3176 (29 September 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2021/4091
Re:Russell William Jack
APPLICANT

AndInspector-General in Bankruptcy
RESPONDENT

Decision
Tribunal:Deputy President Boyle
Date:29 September 2022
Place:Perth

The decision of the delegate of the Respondent made on 31 May 2021 pursuant to s 149N of the Bankruptcy Act 1966 (Cth) not to cancel an objection to the Applicant’s discharge from bankruptcy is affirmed.
...[SGD].....................................................................
Deputy President Boyle
Catchwords
BANKRUPTCY – s 149N of the Bankruptcy Act 1966 (Cth) – trustee’s objection to discharge – special ground of objection – whether there is sufficient evidence to support the special ground – whether Applicant failed to provide any reasonable excuse for conduct constituting special ground – Applicant’s salary paid into wife’s account – family home owned by company controlled by Applicant’s wife – Applicant’s income paid into wife’s account used partially to repay mortgage over property – Applicant failed to provide reasonable excuse – prohibition under s 149N(1A) of the Bankruptcy Act applies – reviewable decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) s 43
Bankruptcy Act 1966 (Cth) ss 121, 121(2), 121(4), 121(4)(a), 121(6), 121(6)(e), 139CA(1)(a)(ii), 149A, 149B(1), 149C, 149D(1), 149D(1)(ab), 149D(1), 149D(1)(ab), 149D(1)(d), 149D(1)(e), 149K, 149N, 149N(1), 149N(1)(a), 149N(1)(b), 149N(1)(c), 149N(1)(d), 149N(1A), 149N(1A)(a), 149N(1A(b), 149N(1A)(c), 149Q
Bankruptcy Legislation Amendment (Anti-Avoidance) Act 2006 (Cth)
Corporations Act 2001 (Cth)
Cases
Bisan Ltd v Cellante [2002] VSC 430
Breen v Williams (1996) 186 CLR 71

Carter and Australian Securities and Investments Commission [2020] AATA 809
Caruana and Inspector-General in Bankruptcy [2008] AATA 307
Jones v Dunkel (1959) 101 CLR 298
Mallett and Inspector-General in Bankruptcy [2018] AATA 3739
Michael John Fuller and Hugh Jenner Wily [1998] AATA 577
Nguyen v Pattison [2004] FMCA 517
Phillips and Inspector-General in Bankruptcy [2012] AATA 788
Phillip Jack and Inspector-General in Bankruptcy [2012] AATA 788
Radford v Owners of Miami Apartments, Kings Park Strata Plan 4523666 [2007] WASC 250

Re Cummins; Richardson v Cummins (1951) 15 ABC 185, 188
Rimanic and Inspector-General in Bankruptcy [2010] AATA 875
Westpac Banking Corporation v The Bell Group (No. 3) [2012] WASCA 157
Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183
Wortman and Inspector-General in Bankruptcy [2021] AATA 2919
Secondary Materials
Explanatory Memorandum, Bankruptcy Law Amendment Bill 2002 (Cth) para 52
Explanatory Memorandum, Bankruptcy Legislation Amendment (Anti-avoidance) Bill 2005 (Cth) para 22
Michael Murray and Joe Giacco, Australian Government Solicitor’s Office, ‘Objections to Discharge – Getting it Right’ (Conference Paper, Insolvency and Trustee Australian Natural Bankruptcy Congress, 2006)
REASONS FOR DECISION
Deputy President Boyle
29 September 2022
THE APPLICATION

The Applicant seeks the review of the decision of a delegate of the Respondent made on 31 May 2021,[1] pursuant to s 149N of the Bankruptcy Act 1966 (Cth) (Act) not to cancel an objection to the Applicant’s discharge from bankruptcy.
[1]T Documents/5.
The application to the Administrative Appeals Tribunal is made under s 149Q of the Act.
BACKGROUND
On 23 November 2017 the Applicant became…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Jack and Inspector-General in Bankruptcy and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2022] AATA 3176
Decision Date: 29 September 2022

CaseChat Overview and Summary

The applicant sought the cancellation of an objection to his discharge from bankruptcy, which had the effect of extending his bankruptcy until 24 November 2025. The Inspector-General in Bankruptcy, as the respondent, had decided not to cancel the objection. The matter was heard by Deputy Boyle P.

The court was required to determine whether there was sufficient evidence to support the special ground of objection relied upon by the trustee, specifically whether the applicant had failed to provide a reasonable excuse for conduct constituting that special ground. The relevant ground of objection was that a transfer was void against the trustee in bankruptcy because of section 121 of the *Bankruptcy Act 1966* (Cth).

Deputy Boyle P reasoned that the applicant's salary was paid into his wife's account, and the family home was owned by a company controlled by his wife. A portion of the applicant's income paid into his wife's account was used to repay the mortgage over this property. The court found that the applicant had failed to provide a reasonable excuse for this conduct. Consequently, the prohibition under section 149N(1A) of the *Bankruptcy Act 1966* applied, meaning the objection could not be cancelled under section 149N(1).

The decision of the delegate of the respondent, made on 31 May 2021, not to cancel the objection to the applicant's discharge from bankruptcy was affirmed.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The effect of the Respondent’s decision not to cancel the objection to discharge on the ground in s 149D(1)(ab) of the Act, is to extend the Applicant’s bankruptcy to 24 November 2025.the hearing and the evidence The application was heard on 24 March 2022. Mr R Gillon appeared for the Applicant and Mr J Giacco appeared for the Respondent. The Applicant provided written closing submissions on 8 April 2022 and the Respondent provided written closing submissions on 26 April 2022. The Applicant was the only witness to give evidence at the hearing. The following documents are before me:(a)Affidavit of the Applicant sworn 1 December 2021 (A1);(b)KRPM Pty Ltd ASIC extract, handed up at hearing 24 March 2022 (R1); and(c)BORAL proof of debt document handed up at hearing 24 March 2022 (R2).(d)Section 37 T documents;(e)Applicant’s Statement of Facts, Issues and Contentions (SFIC) dated 22 September 2021;(f)Respondent’s SFIC dated 3 November 2021;(g)Applicant’s supplementary submissions dated 1 December 2021;(h)Respondent's tender bundle (TB) filed on 23 March 2022;(i)Applicant’s closing submissions filed on 8 April 2022; and(j)Respondent’s closing submissions filed on 26 April 2022.LEGISLATIVE FRAMEWORK Section 149A of the Act provides that if an objection to the discharge of a bankrupt is filed, then the date of discharge of the person from bankruptcy is extended from three years from the date on which the bankrupt filed their statement of affairs, depending on the grounds of the objection, to five years or eight years from that date. In the case of an objection on the ground in s149D(1)(ab) of the Act, the bankruptcy is extended to eight years from the date on which the bankrupt filed their statement of affairs.[7] [7] Section 149A(2)(a)(i) of the Act. Section 149B(1) of the Act provides as follows:Subject to the following provisions of this Subdivision, at any time before a bankrupt is discharged from bankruptcy under section 149, the trustee may file with the Official Receiver a written notice of objection to the discharge. Section 149C of the Act provides:(1)A notice of objection must:(a)set out the ground or each of the grounds of objection, being a ground or grounds set out in subsection 149D(1) but not being a ground or grounds of a previous objection to the discharge that was cancelled; and(b)refer to the evidence or other material that, in the opinion of the trustee, establishes that ground or each of those grounds; and(c)state the reasons of the trustee for objecting to the discharge on that ground or those grounds.(1A)Paragraph (1)(c) does not apply to a ground specified in paragraph 149D(1)(ab), (d), (da), (e), (f), (g), (h), (ha), (ia), (k) or (ma).(2)A notice of objection is not invalid merely because it does not state the ground or grounds of objection precisely as set out in subsection 149D(1) provided that the ground or grounds can reasonably be identified from the terms of the notice. Section 149D(1) of the Act relevantly provides that:The grounds of objection that may be set out in a notice of objection are as follows:…(ab)any transfer is void against the trustee in the bankruptcy because of section 121;…

Decision

Reasons for decision

The Applicant seeks the cancellation of the objection under s 149N of the Act. For the reasons set out above, I find that the requirements of s 149N(1) of the Act are not met and, further, that the prohibition under s 149N(1A) of the Act on cancelling this objection under s 149N(1) of the Act applies. Accordingly, the Applicant fails.DECISION The decision of the delegate of the Respondent made on 31 May 2021 pursuant to s 149N of the Act not to cancel an objection to the Applicant’s discharge from bankruptcy is affirmed.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.