Kay and Inspector-General in Bankruptcy
[2024] AATA 2064
•26 June 2024
Kay and Inspector-General in Bankruptcy [2024] AATA 2064 (26 June 2024)
Division:GENERAL DIVISION
File Number(s): 2023/1544
Re:GREGORY STEVEN KAY
APPLICANT
INSPECTOR-GENERAL IN BANKRUPTCYAnd
RESPONDENT
DECISION
Tribunal:Mr Robert Reitano, Member
Date:26 June 2024
Place:Sydney
I affirm the Inspector-General in Bankruptcy’s decision on 13 February 2023 not to amend Gregory Stephen Kay’s statement of affairs filing date recorded in the in the National Personal Insolvency Index.
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Mr Robert Reitano, Member
CATCHWORDS
BANKRUPTCY – National Personal Insolvency Index – correction – inaccurate or misleading – sending by ordinary post – filing – no evidence of receiving – date of discharge from bankruptcy – unsatisfactory evidence - decision affirmed
LEGISLATION
Bankruptcy Act 1966 (Cth)
Bankruptcy Regulation 2021 (Cth)
CASES
Sofia and Anor v. Pattison and Anor[1997] FCA 1586
James v Inspector-General (2019) AATA 5171REASONS FOR DECISION
Mr Robert Reitano, Member
The very confined issue in this case is whether the National Personal Insolvency Index (Index) should be corrected because it is inaccurate or misleading in so far as it records Mr Gregory Steven Kay (Mr Kay) as having filed his Statement of Affairs (SOA) under section 54 of the Bankruptcy Act 1966 (Cth) (Act) on 24 June 2019.
I have reviewed the decision and have decided to affirm the Inspector-General in Bankruptcy’s decision on 13 February 2023 not to amend Mr Kay’s SOA filing date as recorded in the in the Index. The following are my reasons for that decision.
Before dealing with the reasons I should record that as the Senior Member who presided over the hearing is not able to finalise a decision in this matter, on 24 June 2024 at a directions hearing both parties consented to me making a decision in the matter based on the evidence and information led at the hearing and a review of the transcript and the audio-visual recording of the hearing.
REGULATORY FRAMEWORK
The regulatory framework is straightforward so far as it concerns the issues in this matter. The starting point is sub-section 54(1) of the Act which requires that where a sequestration order is made the person to whom the order is directed must within 14 days of being notified complete and file a SOA with the Official Receiver and provide a copy to the trustee.
A number of sections of the Act demonstrate that it is the actual filing by providing a document that is important. Sub-section 54(4) is an example of such a provision because it permits a creditor to inspect a SOA that has been filed and seek a copy of it, so that if the document has not in fact been provided it cannot be inspected. Section 57B of the Act provides that the Official Receiver must accept or refuse to accept the SOA within 14 days from the date upon which it is filed. That cannot be done unless the document is actually received by the Official Receiver.
Section 149 of the Act provides that a bankrupt who has been made bankrupt because of a sequestration order is discharged from bankruptcy three years from the date that the bankrupts’ statement of affairs was filed and accepted under sub-section 57B(1).
As it will become relevant later I should record the terms of sub-section 33A(1) of the Act:
(1) If the Court is satisfied that a person believed on reasonable grounds that a statement of affairs that relates to the person's bankruptcy was filed for the purposes of section 54, 55, 56B, 56F or 57 at a time before it was actually filed, the Court may order that the statement of affairs is to be treated as having been filed at a time before it was actually filed.
Regulation 73 of the Bankruptcy Regulation 2021 (Cth) (Regulations) provides for the establishment of the Index and gives responsibility for maintaining the Index to the Official Receiver. Regulation 76 requires the Official Receiver to include in the Index amongst other things the date on which a SOA was filed. Regulation 78 requires that the Index include the date on which the bankrupt was discharged.
Regulation 80 provides:
(1) Subject to subsection (4), a person who is a debtor or bankrupt may apply in writing to the Inspector - General for information about the person:
(a) not to be entered in the Index, on the ground that the entry of the information would jeopardise, or be likely to jeopardise, the person's safety; or
(b) in the Index to be removed on the ground that:
(i) its inclusion jeopardises, or is likely to jeopardise, the person's safety; or
(ii) it is inaccurate or misleading; or
(c) in the Index to be corrected on the ground that it is inaccurate or misleading.
Sub-section (4) is not relevant. The power that Mr Kay relies on is the power in sub-regulation 80(1)(c).
Regulation 103 provides:
(1) Unless the contrary intention appears, this section applies if a document is required or permitted by the Act or this instrument to be given or sent to, or filed or lodged with:
(a) the Inspector - General; or
(b) the Official Receiver; or
(c) the Official Trustee.
(2) The document must be posted, delivered, sent by email, or sent through the website of the Australian Financial Security Authority, to:
(a) in the case of a document for the Inspector - General--the office of the Inspector - General; or
(b) in the case of a document for the Official Receiver--the office of the Official Receiver; or
(c) in the case of a document for the Official Trustee--the office of the Official Receiver.
(3) If this section applies, the document is taken to be received, filed or lodged only when the document (or, where applicable, a copy of it) is actually received by, or on behalf of, the Inspector - General or the Official Receiver (as the case requires).
BACKGROUND
Like the regulatory background the facts relevant to this matter are reasonably straightforward. On 17 April 2014, Mr Kay and his wife, Sue Maree Kay (Ms Kay), were made bankrupt when a sequestration order was made on the petition of a bank. From then until 30 November 2015 there was correspondence and phone calls between Ms Kay and representatives of the Australian Financial Securities Authority (AFSA) concerning the need for Mr Kay, and Ms Kay, to lodge a SOA. The details of those communications are not all that important although one or two of the things that were said are worth noting.
On 29 May 2014 Ms Kay told an officer of AFSA, amongst other things, something to the effect that ‘regarding the Statement of Affairs and that there is a lot in there to be filled in and that it is taking longer than she anticipated to get it filled in and sent in’ and that ‘she is going to try and get her Statement of Affairs as well as her husbands in early next week.’ It is only necessary to note that on Ms Kay’s version of what happened when questioned in the Tribunal nothing happened ‘early next week’ or as things now turn out according to Ms Kay some 18 months later. Ms Kay was unable to explain why that was the case.
On 30 November 2015 an enforcement officer from AFSA wrote to Ms Kay advising her of her obligation to file an SOA. The letter outlined the reasons why the SOA needed to be filed, in particular because discharge from bankruptcy would date three years from the date of filing. The letter enclosed two SOA forms one of which was to be returned to a particular address. The terms of the letter did not say that a pre-stamped addressed envelopes were enclosed, but apparently one was enclosed.
Ms Kay said in her evidence that she posted her and Mr Kay’s SOA in December 2015 by leaving an envelope with postage stamps on it at a post office in Oxenford on the Gold Coast. She said she remembered it was December because she posted some gift cards to her grandchildren’s parents so they could buy Christmas gifts for her grandchildren. Although Ms Kay was emphatic that those things happened in December 2015 when she was questioned about it in the Tribunal, that position had not always been the case: the Application Mr Kay made to the Tribunal had suggested the date was December 2014 and I refer to some of the other things that suggest it was not always so clear in a moment.
The means by which Ms Kay posted the items was ‘over the counter’, that is she left the envelope with someone who was at the counter. It makes no difference to the outcome if Ms Kay is wrong about that, and she put them in a post box: but given that the envelopes were said to be pre-stamped one wonders why she did that. I do not put any weight on that fact as people often do odd things for no particular reason. What is important for present purposes is that the envelopes were not posted by registered post, and they were not subject to what is ordinarily known as ‘tracking’— such that the person posting the envelope would know that it has arrived safe and sound. It follows that Ms Kay has no contemporaneous evidence of the receipt of the documents by the addressee. Ms Kay did not receive any correspondence or other communication from the Official Receiver indicating that the envelope or the SOAs that were in it had been received.
In August 2016 there were some further conversations between Ms Kay and an officer from AFSA. A file note generated at that time suggests that Ms Kay told the officer she had sent the SOA to them in 2014. There were also some proceedings commenced that sought to have Ms Kay penalised for not filing her SOA. The evidence suggests that the proceedings were adjourned at some stage to allow investigations to be conducted about whether a SOA had been lodged or received. It is important to note that the reason for the adjournment was to make enquiries about whether anything had in fact been received. It is not so important that Ms Kay was found guilty of not providing an SOA because that seems to have been the result of the later hearing: where Ms Kay did not appear because she says she did not understand that the proceedings were continuing. The proceedings did continue on a later date so presumably someone after apparent enquiry confirmed there was no SOA that had been filed. I will not give that fact any weight mainly because Ms Kay could not possibly have tested the hearsay evidence arising from the file note that was relied upon.
In late November 2018 and March 2019 Ms Kay was told by officers of AFSA that she had not filed a SOA. Ms Kay on one occasion told the officer that the SOA had been sent in December 2014 or December 2015 and on the second occasion she said it had been sent ‘a few years ago’. In early June 2018 Ms Kay told another officer of AFSA that both her and her husbands’ SOAs had been filed in 2015 after she was handed the documents in Court.
On 24 June 2019 Mr and Ms Kay filed their SOAs with the Official Receiver. They were accepted for filing that day. Three years later on 25 June 2022 Mr Kay was discharged from bankruptcy.
Mr Kay’s evidence was that he left everything to Ms Kay. Even so far as filling out the SOA is concerned: although he would have spoken to her about what was being done. Ms Kay said everything she did regarding the SOAs for her husband and herself was all done at the same time except so far as the prosecution was concerned— as only she was prosecuted.
Finally, Ms McLachlan an Assistant Director of AFSA gave evidence about the electronic document management system that AFSA has used since 2007 which maintains records in relation to all bankrupts. That document management process involves scanning all documents into the system once they are received so that they can later be accessed in Portable Document Format. Ms McLachlan also explained the process that accompanied the receipt of SOAs generally which involved the refusal or acceptance of a SOA for filing. In either case the SOA would be scanned into the system and notices and associated documents would be generated by the system which would be added to the correspondence history relevant to the bankrupt.
Ms McLachlan examined AFSA’s system in preparing her evidence for this matter and was unable to find any record of a SOA having been saved for either Mr Kay or Ms Kay in 2014 or 2015 or any associated correspondence that would normally be generated as a result of receiving a SOA. Ms McLachlan was able to identify and produce documents from the system that were referable to the SOAs filed on 24 June 2019.
Till now it may not be immediately clear why Mr Kay wishes to have the Index corrected. The reason is largely irrelevant to the outcome except it may suggest I should treat the evidence of Mr and Ms Kay carefully because they stand to gain from a successful outcome. In November 2021 Mr Kay’s mother died leaving him an inheritance. Mr Kay will lose a deal of that inheritance if the date in the Index is not amended because he would have been undischarged from his bankruptcy at the time the inheritance vested. If his SOA was filed in December 2015, he would have been discharged from his bankruptcy in December 2018 so that he would not lose any of his mother’s inheritance.
WAS THE SOA FILED?
Sub-section 54(1) of the Act requires that a SOA be ‘filed’ rather than ‘posted’. The words are relevantly different in their both their ordinary meaning and in their legal meaning. The words need to be given a meaning in the context of sub-section 54(1). To be ‘filed’ a document generally needs to be in the hands of the person or body with whom it is ‘filed’.[1] That is, it needs to be received and the obligation is on the bankrupt to make that happen.[2] That approach is consistent with other provisions to which I made reference earlier that suggest that the purpose of filing is so that things like creditors inspecting the SOA, or the Official Trustee accepting or refusing the document can take place. This view of the meaning of the word ‘filed’ is confirmed by the terms of the Regulation which while permitting documents to be posted makes clear that they are not ‘filed’ until they are received.
[1] Sofia and Anor v. Pattison and Anor[1997] FCA 1586; James v Inspector-General (2019) AATA 5171.
[2] Ibid.
There is no evidence that the SOAs that Ms Kay said were posted in either December 2014 or December 2015 were received by the Official Trustee. Ms Kay was unable to offer any evidence that the documents were received by the Official Trustee. Even if the SOAs were posted at some stage Ms McLachlan’s evidence contradicts any suggestion that the SOA’s were received, that is, ‘filed’, in the sense that they were with the Official Trustee at either time. Ms McLachlan’s evidence is the only evidence that directly bears upon the question of whether the SOA was received. It affirmatively demonstrates it was not.
I am unable to find that Mr Kay’s SOA was filed in December 2014 or December 2015.
CAN THE INDEX BE ‘CORRECTED’?
Although that is a sufficient basis to dispose of the application, I should indicate that on the evidence I am unable in any event to conclude the SOA that Ms Kay says she posted in December 2015 was in fact posted or if it was that that happened in December 2014 or December 2015. Ms Kay’s evidence and the evidence generally was unsatisfactory: at least in the sense that there were inconsistent dates given at various time for the SOA being posted – the competing dates appear to be ‘December 2014’, ‘December 2015’, ’November – December 2015’ or a ‘few years ago’. There were references to either of those dates at various times over the whole history of the matter although Ms Kay settled on 15 December 2015 in her evidence. Significantly another inconsistency arises from the phone call in May 2014 when Ms Kay said the SOAs was being sent ‘early next week’ yet on Ms Kay’s evidence it did not happen for over 18 months. I am unable on the evidence to find that the SOA was posted in December 2015 or on any particular date.
As I am unable to find that the SOA was posted in 2015, even if that could be found to have amounted to filing, it is not possible for the ‘Index to be corrected on the ground that it is inaccurate or misleading’. That is because the unsatisfactory nature of the evidence simply does not permit a finding about a correct date.
ANOTHER MATTER
For completeness I should add that I have not found it necessary to consider any argument reliant upon section 33A as it is clear that the power in that section is reposed in a court and not in the Tribunal. It is irrelevant to the Tribunals determination of the matter that Mr Kay or Ms Kay may have believed on reasonable grounds that they had lodged the SOA.
DECISION
I affirm the Inspector-General in Bankruptcy’s decision on 13 February 2023 not to amend Gregory Stephen Kay’s statement of affairs filing date recorded in the in the National Personal Insolvency Index
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for the decision herein of Mr Rob Reitano, Member
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Associate
Dated: 26 June 2024
Date(s) of hearing: 30 May 2024 For the Applicant: Mr G. S Kay and Ms S. M Kay Counsel for the Respondent
Solicitors for the Respondent:
Mr N. Swan
Ms A Robertson, Australian Government Solicitor
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