LAUREN GEORGE and INSPECTOR-GENERAL IN BANKRUPTCY

[2010] AATA 472

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 472

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/1698

GENERAL ADMINISTRATIVE DIVISION		)
Re		LAUREN GEORGE

Applicant

And INSPECTOR-GENERAL IN BANKRUPTCY

Respondent

DECISION

Tribunal Deputy President P E Hack SC

Date31 May 2010

PlaceBrisbane

Decision The hearing of the application is adjourned to a date to be fixed.

..............Signed...................

Deputy President

REASONS FOR DECISION

31 May 2010 Deputy President P E Hack SC    

1.The underlying proceedings concern an application by Ms Lauren George to review the deemed decision of the Inspector-General in Bankruptcy on her application for a review by the Inspector-General of her trustee’s objection to Ms George’s automatic discharge in bankruptcy by operation of law. Ms George became a bankrupt in February 2006 and would have been discharged from bankruptcy by operation of law three years from that date.

2.Prior to the expiry of that date the trustee in bankruptcy lodged an objection which includes relevantly some “special grounds”, that is, the grounds referred to in s 149N(1A) of the Bankruptcy Act 1966 (Cth). There is considerable factual overlap between the matters raised in the trustee’s notice of objection and matters that have been raised, or are to be raised, in proceedings in the Federal Magistrates Court of Australia. Some sense of the degree of overlap can be gained by reference to the judgment of the Full Court of the Federal Court in George v Fletcher (Trustee) [2010] FCAFC 53.

3.That was an appeal by Ms George from a decision of a Federal Magistrate granting summary relief to the trustee on the trustee’s claim that certain real and personal property formed part of Ms George’s bankrupt estate. The majority of the Court, Ryan and Logan JJ, concluded the Magistrate erred in determining the matter summarily insofar as it concerned real property but as I read their Honours’ judgment they were satisfied that declarations made by the Federal Magistrate in respect of a Toyota Land Cruiser and a horse were correctly made. The first part of that aspect, that relating to the real property, has been remitted to the Magistrates Court for hearing and determination according to law. There are, as well, continuing proceedings in relation to chattels, notwithstanding the affirmation by the Full Court of the orders made in relation to chattels. Ms George tells me that, so far as the motor car is concerned, she seeks to contend it is below an amount that would permit her to retain ownership of the vehicle and that, as far as the horse is concerned, she has commenced proceedings by which she will seek to contend that the horse was acquired with the proceeds of a personal injuries action and thus is exempt property under the Bankruptcy Act.

4.I have spent the day hearing Ms George’s evidence about the factual matters that underlie the trustee’s objection and she has indicated at the conclusion of the day, when discussions turned to when the matter might be resumed, that she wished to contend that it was not open to the trustee, as a matter of law, both to pursue the remedy the trustee pursued in the Federal Magistrates Court, that is, a declaration in relation to whether the real or personal property formed her bankrupt estate, and, as well, to seek to extend her bankruptcy by the lodgement of a notice of objection to discharge.

5.I do not consider that the pursuit by the trustee of legal remedies in relation to what the trustee alleges to be divisible property of the bankrupt precludes a trustee from taking action to extend the bankruptcy by lodging an objection. It is no doubt correct, and the cases referred to in the Inspector-General’s submissions, in particular, Inspector-General in Bankruptcy v Nelson (1998) 86 FCR 67 indicate, that a trustee must have a sufficient reason to file a notice of objection, a sufficient reason being something concerned with the proper discharge of the trustee’s obligations.

6.Ms George says that she is being punished by her continuing status as an undischarged bankrupt. It may be accepted that that has an adverse effect on her. It may be undoubtedly accepted that she regards it as punishment but that is the consequence of her bankruptcy rather than the motivation of the trustee as far as I can see.

7.One of the matters that will need to be considered ultimately, when I consider whether the decision made was the correct or preferable decision, are the matters in s 149N(1A) of the Bankruptcy Act. That would oblige me to consider whether there is at least one special ground, whether there is sufficient evidence to support the existence of one special ground and whether Ms George had reasonable excuse for any conduct or failure that was found to constitute a special ground. It may well be that consideration of the existence of a special ground will involve consideration of questions involving the duty to be discharged by the trustee in lodging the objection.

8.It is, at least for the moment, academic to consider that but where, as I conclude, it is a matter of discretion for the trustee there is no impediment in law, and thus it is premature to determine at this stage that the objection decision should be set aside which I take to be the decision that would flow from Ms George’s form of words ‘the objection should be discharged’.

9.Her alternative application, which is supported by the representative of the Inspector-General, is that the proceedings should be adjourned until the conclusion of the proceedings in the Magistrates Court. Given the extent as has emerged of the overlap of the proceedings in this Tribunal and in the Court it is, I think, preferable to adopt that course and await the outcome of those proceedings. In those circumstances I will adjourn the proceedings to a date to be fixed and they can be brought back on by the parties writing to the Tribunal after the conclusion of the Magistrates Court proceedings.

I certify that the 9 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed:         ..............Signed......................................................
  Associate

Date of Hearing  31 May 2010
Date of Decision  31 May 2010
Date of written reasons             25 June 2010
The Applicant   Self-represented    
Solicitor for the Respondent     Inspector-General in Bankruptcy