Jatkar v RAMBALDI - [2003] FMCA 355

FEDERAL MAGISTRATES COURT OF AUSTRALIA

JATKAR v RAMBALDI

[2003] FMCA 355

BANKRUPTCY – Appeal from trustee's decision refusing permission to travel overseas – appeal allowed – bankrupt wishing to visit elderly sick mother – risk of failing to return – whether visit will hamper administration of estate – consideration of trustees discretion – whether just and equitable to permit Applicant to leave Australia to visit mother.

Bankruptcy Act 1966, s.178

Tyndall:Ex parte Official Receiver (1977) 17 ALR 182
Hicks :ex parte Lamb (Heerey J, 4 March 1994 VB 1473 of 1993)

Applicant:

LEENA SUHAS JATKAR

Respondent:

GESS RAMBALDI

File No:

MZ 889 of 2003

Delivered on:

22 August 2003

Delivered at:

Melbourne

Hearing date:

21 August 2003

Judgment of:

Phipps FM

REPRESENTATION

Counsel for the Applicant:

Mr Fary

Solicitors for the Applicant:

Christopher Wray

Counsel for the Respondent:

Mr Bornstein

Solicitors for the Respondent:

Norton Gledhill

ORDERS

The Respondent’s decision to refuse permission to Dr Leena Suhas Jatkar to leave Australia for the purpose of visiting her mother be set aside.
The Applicant is granted permission to leave Australia and travel overseas between 25 August 2003 and 8 October 2003 for the purpose of visiting her mother in India.
Prior to departure the Applicant provide to the Respondent the following:
(a)a detailed and up-to-date itinerary;
(b)the current address where the Applicant intends to reside whilst overseas;
(c)a photocopy of the Applicant's ticket.
Upon the provision of the matters set out in order 3, the Respondent return the Applicant's passport to her.
Within seven days after returning to Australia the Applicant give her passport to the Respondent.
That there be liberty to apply.
That there be no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ 889 of 2003

LEENA SUHAS JATKAR

Applicant

And

GESS RAMBALDI

Respondent

REASONS FOR JUDGMENT

The Applicant became bankrupt on 20 November 2002. On 17 December the Respondent became trustee of the Applicant's estate. The Applicant is appealing the decision of the Respondent refusing to return her passport and refusing to give his written consent to her to leave Australia. The application is made pursuant to s.178 Bankruptcy Act 1966.
The Applicant and her husband are medical practitioners. Both are bankrupt. The Respondent is trustee of the husband's estate as well as that of the Applicant. The Applicant and her husband conducted a radiology practice, largely run by the husband, which failed.
In January 2003 the Applicant and her husband applied to the trustee for permission for both to travel to the United States to enable the husband to take up employment and for the Applicant to travel to India to visit her mother. The appeal is concerned only with the Applicant's desire to visit her mother.
The application is based on compassionate grounds, that the Applicant's mother is elderly and seriously ill. The trustee rejected the application by letter of 12th February 2003. In that letter, written to the Applicant’s solicitor, the trustee said that he had assessed and given weight to the following factors:
i)Whether permission to travel should be granted on compassionate grounds alone;
ii)Your client's failure to attend a meeting of creditors and interview with me on the grounds that she was unwell;
iii)Your client's failure to respond to creditors’ queries to their satisfaction during the Part X process;
iv)That my investigations are ongoing, and that there are significant benefits in having the bankrupt present in the jurisdiction to provide information concerning her conduct and examinable affairs and thus enabling me to conduct a proper administration of her estate without unnecessary or unreasonable delay;
v)The likelihood of the bankrupt failing to return to the jurisdiction and the possible motivating factors for her to return or not return. I note that your client has refused to provide a $30,000.00 bond (and has offered a $2000.00 bond); her residence has been sold and settlement is due on 13th February 2003; she has family ordinarily resident in India and her husband has sought permission to seek employment and reside in the United States;
vi)That an examination pursuant to section 81 of the Bankruptcy Act 1966 has been foreshadowed and will take place in the near future;
vii)That all non-related creditors present at the recent meeting of creditors expressed their wishes that the bankrupt not be given permission to travel;
viii)The bankrupt’s denial of the existence of the debt to her brother in the sum of $250,000.00 when correspondence from her accountant makes reference to the debt (copy attached);
ix)Failure to provide a name and address of her brother to enable me to make independent inquiries;
x)The bankrupt's failure to disclose in her statement of affairs the transfer of a motor vehicle previously registered in her name to a related entity;
xi)The net deficiency in the estate in excess of $8,000,000.00.
After setting out these considerations the letter stated:
I acknowledge that your client has a legitimate reason to travel overseas however, I believe that this must be subordinated to what is necessary for the proper and efficient administration of the joint and separate bankrupt estates.
Significant "weight" has been given to your client’s application to travel on compassionate grounds, however in light of the "weight" applied to the other considered factors, I have elected to refuse the application to release your client's passport and grant permission to travel.
Correspondence took place between the Applicant's solicitors and the Respondent subsequent to that date. Some additional representations were made to the trustee. More material is contained in the affidavits of the Applicant in support of the appeal. The trustee, in an affidavit filed 20 August 2003 referred to the additional material, notably medical reports. The trustee says that he has considered the additional material and following that consideration has concluded that his decision would not be different.
Further material, significantly a medical report from a neurophysician treating the Applicant’s mother was filed on the day of the hearing. Counsel for the trustee said that the trustee had not yet seen that report and he was unable to say whether it might cause the trustee to reconsider his position. Arrangements would be made to inform me if the trustee did reconsider his position. I have not been informed of any change.
The application is now urgent. The medical report of the neurophysician dated 20 August 2003 shows that the Applicant's mother, aged about 80, is in a critical condition. The report is handwritten and is faxed and is a little difficult to read. Its conclusion states:
Conclusion: precarious condition. Relatives (indecipherable) informed immediately.
The Applicant has made a booking to leave for India next Monday. Whether she can go depends on the result of this appeal.
S178 Bankruptcy Act provides:
(1) If a bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
(2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision.
In Re Tyndall:Ex parte Official Receiver (1977) 17 ALR 182 Deane J said at 186:
“In my view, the wording of s178 of the Act is such as to confer upon the Court the widest possible discretion as to the appropriate order which should be made in the particular case and is quite inconsistent with the approach that, upon application made pursuant to the section by bankrupt, creditor or other person affected by an act, omission or decision of the trustee, the Court is only empowered to interfere with the trustee's act, omission or decision if it is of the view that the trustee has acted absurdly or unreasonably or in bad faith. Once the matter is properly before the court, the court is, by the express words of s178, empowered (and, as I have said, obliged) to make such order in the matter as it thinks just and equitable.”
Later, at 190 – 191, he said:
“Restrictions upon such travel under the bankruptcy legislation must be seen as being aimed at ensuring the proper administration of the bankruptcy laws and of the bankrupt’s estate under such laws and not as a penalty imposed upon the citizen as a consequence of inability to pay debts leading to the making of the sequestration order. In some cases, the possibility that the bankrupt has committed offences under the act and is seeking to abscond from possible prosecution will be extremely relevant. In some cases the financial rewards to be derived by the bankrupt estate from such overseas travel will clearly outweigh any inconvenience in the administration of that estate resulting from the bankrupt’s departure from the jurisdiction. This is not, however, such a case for the reason that, as I have said, I am unconvinced that the bankrupt estate of the Applicant could be expected to benefit over and beyond the $40 per month which the bankrupt has currently undertaken to pay to the trustee. In some cases, the requirements of the prompt and efficient administration of the estate of the bankrupt and the administration of the act would justify the refusal to grant leave to travel overseas. This is, in my view, such a case.”
In Re Hicks: ex parte Lamb (Heerey J, 4 March 1994 VB 1473 of 1993), His Honour said:
“I suggested to counsel for the trustee in argument that the following issues were, while not necessarily conclusive, nevertheless at the forefront of the matters to be considered in exercising my discretion:
(i) Is the proposed visit genuine?
(ii) Is the bankrupt likely to return to Australia as promised?
(iii) Will the visit hamper the administration of the estate?”
In his consideration in February, and his later consideration of the further material provided in the Applicant's affidavits, the trustee accepted that the Applicant's elderly mother lives in India. He was not satisfied that the material contained in the medical reports he had received substantiated the claims made by the Applicant concerning the mother’s health. The Applicant had claimed that her mother suffered from a number of illnesses which were not referred to in the medical reports.
The report exhibited to the Applicant's affidavit filed on the day of the hearing sets out the mother’s illnesses; Alzheimer's disease, Parkinson's disease and a mild cardiac attack in early 2003. It concludes by stating that she has lost sensation in most of her left side of her body and is in intensive care. It then concludes as stated above. The conclusion to be drawn is that the Applicant's mother may be close to the end of her life and if the Applicant does not go now she will not see her before she dies. The Applicant exhibited documents which showed that she has a booking to leave Australia on 25 August 2003 and return on 8 October 2003.
I conclude that the Applicant has a compelling compassionate reason for wanting to leave Australia for a short period.
I do not consider that there is a significant risk that the Applicant will not return to Australia. The Respondent accepts that she is an Australian citizen with an Australian passport and that she has lived in Australia for a considerable period of time. She is employed as a general practitioner for three sessions per week. She says that her state of health does not permit her to work longer hours. Her husband and son are in Australia. Her husband is working in New South Wales during the week and returning at weekends. Her daughter works in Germany employed by the Australian foreign affairs department. She will soon be returning home. The Applicant says that she considers Australia to be her home. There is no evidence of close relatives in India other than her mother.
One of the reasons the trustee gave for exercising his discretion was the failure of the Applicant to provide a bond of $30,000.00. He noted that her residence had been sold and settlement was due on 13th February 2003. This, I consider, is not a relevant consideration. While the Applicant may herself have arranged the sale of the house, the proceeds must vest in the trustee and are not available to the Applicant. If she did have $30,000.00 from any source, it would vest in the trustee. There is no evidence that any other person can provide such a bond. Her son has offered only $2000.00. In the absence of any evidence of ability to provide a bond, the failure to offer to do so cannot be a relevant consideration.
The trustee points to several matters concerned with the administration of the estate. He points to the Applicant's failure to attend a meeting of creditors and interview. He says there are significant benefits in having the bankrupt present in the jurisdiction to provide information. He considers the Applicant's failure to respond to creditors’ queries to their satisfaction during a Part X process. He says that an examination pursuant to s.81 of the Bankruptcy Act has been foreshadowed and will take place in the near future. He points to the bankrupt’s denial of the existence of a debt from her brother in the sum of $250,000.00 and the failure to provide the name and address of her brother. He says that the Applicant failed to disclose in her statement of affairs the transfer of a motor vehicle previously registered in her name to a related entity.
The Applicant has referred to each of these matters in her affidavits. She gives her health as a reason for failing to attend meetings. She disputes the amount of the loan to her brother and says that an explanation about the motor car had been provided.
The significance of all these matters is their relevance to the effect on the administration of the estate of the Applicant whilst absent from Australia. The Applicant will be absent for a short period. Each of the matters which the trustee seeks to investigate are not so urgent that it requires attention during that short period. Nothing points to the possibility of any matter arising during that short period about which the trustee might seek information from the Applicant.
A section 81 examination was foreshadowed in February 2003. Application for the issue of summonses for that purpose has only just been made. It is not possible for the s.81 examination to be listed for hearing prior to the Applicant's proposed return.
The trustee points to the size of the deficiency, $8,000,000.00. This is relevant, particularly because of its size. The trustee and creditors are entitled to seek an explanation. However, the size of the deficiency and matters relevant to it will not be affected by the proposed travel.
When I consider the most significant of the relevant considerations my conclusions are in favour of permitting the Applicant to travel. I have considered the Respondent’s reasons, but I have come to different conclusions. The Applicant has a legitimate reason for travelling. She is likely to return to Australia as promised. The administration of the estate will not be hampered by her short absence. These considerations outweigh any other.
I consider that it is just and equitable that I make orders which will permit the Applicant to leave Australia and travel overseas between

25 August 2003 and 8 October 2003. I will include in those orders a requirement that before departing the Applicant provide the Respondent with an itinerary, the current address at which the Applicant intends to reside and a photocopy of the Applicant's ticket. Upon that being done the Respondent is to return the Applicant's passport to her. She is to return the passport to the Respondent within seven days after returning to Australia.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate:

Date: