Kneipp v Jonsson

Case [2013] FCCA 1695

FEDERAL CIRCUIT COURT OF AUSTRALIA

KNEIPP v JONSSON [2013] FCCA 1695

Catchwords:

BANKRUPTCY – Discharge – notices of objection to discharge – application to set aside notices of objection to discharge – where notices upheld by Inspector-General – where applicant debtor requested Trustee to withdraw notices – where Trustee refused request on basis of on-going investigations and disruptive behaviour of applicant – where applicant did not seek review of decisions of Inspector-General by Administrative Appeals Tribunal – whether 60 day time limit to challenge decision of Trustee to make objections absolute – whether applicant precluded from challenging the decision of the Trustee to make the objections – review of decision not to withdraw notices – where notices founded upon applicant’s failure to provide information – where one notice based on failure to disclose potential beneficial interest in estate of applicant bankrupt’s partner – whether applicant’s right to further and better provision out of estate of deceased vests in Trustee – where no application in fact made – whether Trustee should have withdrawn notice – where other notices lodged for valid grounds – where Trustee obtained, or already possessed, information the subject of the notices – whether applicant prompted by objections to provide information – whether notices may be sustained once information obtained by Trustee on basis of additional purpose of continuing investigations – whether to set aside the notices of objection to discharge – whether, when and where examinations should be held.
Legislation:  
Bankruptcy Act 1966, ss.139U, 149, s.149A, 149B, 149C, 149D, 149J, 149K, 149N(3), 149Q, 178, 179
Succession Act 1981 (QLD), s.41(1)

McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547
Heshmati v Paul Burness and Morgan Lane [2012] FMCA 884
Chase, in the matter of Chase v Donnolly [2002] FCA 1565
Macchia v Nilant [2001] FCA 7
Frost v Sheahan [2008] FCA 1073
Wharton v Official Receiver in Bankruptcy (2001) 107 FCR 38
Coffey v Bennett (1961) VR 264 at 266
McEvoy v Public Trustee (1989) 16 NSWLR 92
Collicoat v McMillan (1993) 3 VR 803
Menzies v Marriott (2009) VSC 345
Mango Boulevarde Pty Ltd v Whitton [2011] FCA 1383
Prentice v Wood (2002) 119 FCR 296
Applicant: HENRY HARVEY KNEIPP
Respondent: ANTHONY JAMES JONSSON
File Number: BRG 127 of 2012
Applicant: HENRY HARVEY KNEIPP
Respondent: ANTHONY JAMES JONSSON
File Number: BRG 401 of 2013
Applicant: ANTHONY JAMES JONSSON AS TRUSTEE IN BANKRUPTCY
Respondent:

HENRY HARVEY KNEIPP

WENDY ANN MACKAY
DARREN MITCHELL
File Number: BRG 538 of 2013
Judgment of: Judge Raphael
Hearing dates: 30 & 31 July 2013
Date of Last Submission: 23 August 2013
Delivered at: Sydney
Delivered on: 28 October 2013

REPRESENTATION

Counsel for the Applicant: Mr P O Land
Solicitors for the Applicant: Lee & Co Solicitors
Counsel for the Respondent: Mr J Trevino
Solicitors for the Respondent: MacDonells Law

ORDERS

  1. Application to review decisions the subject of review to the Inspector General dismissed.

  2. Application to review decision of trustee not to withdraw notices of objection 5, 5A, 7 and 8…

Continue reading Kneipp v Jonsson

Sign in free to access the full text

Details
AGLC
KNEIPP v JONSSON [2013] FCCA 1695
Case
[2013] FCCA 1695
Decision Date

CaseChat Overview and Summary

In *Kneipp v Jonsson*, the applicant bankrupt sought to set aside notices of objection to his discharge from bankruptcy. The bankrupt had previously sought review of these notices from the Inspector-General, who confirmed six of the nine notices. The bankrupt did not appeal the Inspector-General's decision to the Administrative Appeals Tribunal, but instead commenced proceedings in the Federal Court seeking to have the notices set aside or to have the court inquire into the respondent Trustee's conduct.

The primary legal issues before the court were whether the bankrupt was precluded from challenging the Trustee's decision to make the objections absolute, given the time limits for appealing the Inspector-General's decision, and whether the Trustee should have withdrawn certain notices of objection. Specifically, the court considered whether a notice based on the bankrupt's failure to disclose a potential beneficial interest in his deceased partner's estate should be set aside, and whether other notices, lodged on valid grounds, could be sustained once the Trustee had obtained the information forming their basis. The court also considered the application of sections 178 and 179 of the *Bankruptcy Act 1966* (Cth) concerning appeals against a Trustee's decision and the court's power to control Trustees.

The court noted that the bankrupt had not availed himself of the statutory right to seek review of the Inspector-General's decision by the Administrative Appeals Tribunal. Instead, he relied on sections 178 and 179 of the *Bankruptcy Act*. Section 178(2) imposes a 60-day time limit for applications to the court after becoming aware of the Trustee's act, omission, or decision. The court observed that the bankrupt's application was made significantly outside this period. Regarding the notice based on the potential interest in his partner's estate, the court acknowledged that the Trustee had entered into a settlement with the estate executors, which had a financially neutral effect. However, the court did not delve deeply into this aspect as the bankrupt had received legal advice suggesting low prospects of success in pursuing his claim for further provision from the estate. The court also considered whether notices could be sustained if the Trustee had obtained the information forming their basis, but found that some notices were lodged on valid grounds.

The court did not make final orders or state the outcome in the provided text.

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

Full text does not contain this section.

Decision

Reasons for decision

For the purposes of the proceedings the objection notices were referred to as notices 1, 2, 3, 4, 5, 5A, 6, 7 and 8. On 14 December 2010 the bankrupt sought review of all nine objections by the Inspector General in accordance with s.149K of the Act. On review the Inspector General confirmed Notices of Objection 3, 5, 5A, 6, 7 and 8 in accordance with s.149N(3) of the Act. The bankrupt was entitled pursuant to what the Full Bench has described as “a code” – in McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547, per Northrop, Ryan and O'Loughlin JJ – to seek review of the Inspector General’s decision to confirm those six objections by application to the AAT in accordance with s.149Q of the Act. He did not so avail himself. What the bankrupt did was to commence proceedings in this court being BRG 127/2012 seeking that the Notices of Objection to discharge be set aside or in the alternative that the court enquire into the conduct of the respondent in relation to the Notices of Objection and then set them aside. This application was made, according to the applicant bankrupt, pursuant to ss.178 and 179 of the Act which are in the following form:“178 Appeal to Court against Trustee's decision etc.(1) If the 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.179Control of Trustees by the Court(1) The Court may, on the application of the Inspector-General, a creditor or the bankrupt, inquire into the conduct of a Trustee in relation to a bankruptcy and may do one or both of the following:(a) remove the Trustee from office; and(b) make such order as it thinks proper.(2) The Inspector-General or a creditor may at any time require a Trustee to answer an inquiry in relation to the bankrupt's estate or affairs.” Under that application number some interim applications were made. These related to one of the Notices of Objection. During the course of the bankruptcy Mr Kneipp’s de facto partner, Ms Mary Ann Azzopardi died. Mr Kneipp was a beneficiary in a small way from her estate but he believed that he had the right to further provision. The Trustee believed that any such right vested in him and eventually came to agree a Deed of Settlement between himself and the executors of the estate which had a financially neutral effect. The interim applications sought declarations that Mr Kneipp’s rights under s.41(1) of the Succession Act 1981 (QLD) to apply to the court for further provision out of Ms Azzopardi’s estate did not vest in the Trustee and that the proceeds of the settlement be repaid to the public Trustee for distribution, possibly to the bankrupt, should he be successful. That aspect of the various matters was not aired at the hearing, presumably because, as was made clear at the hearing, Mr Kneipp had received a considerable amount of legal advice that his prospects of success in such an application to the Supreme Court of Queensland were very very low and that the settlement by the Trustee with the executors did not release any moneys to the Trustee.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.