Low v Maye (No.2)
[2016] FCCA 510
•10 March 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LOW v MAYE (NO.2) | [2016] FCCA 510 |
| Catchwords: BANKRUPTCY – Application for orders in relation to costs and administration of bankruptcy and distribution of dividends. |
| Legislation: Bankruptcy Act 1966 (Cth), Part VI, Division 5, ss.54, 77C, 146, 153A |
| Harrison v Gangell [2013] FCCA 554 Low as Trustee of the Bankrupt Estate ofMaye v Maye [2015] FCCA 3485 Official Trustee in Bankruptcy v Thor [2006] FMCA 1637 |
| Applicant: | JENNIFER ELIZABETH LOW AS TRUSTEE OF THE BANKRUPT ESTATE OF LINFIELD MICHAEL SEAN MAYE |
| Respondent: | LINFIELD MICHAEL SEAN MAYE |
| File Number: | PEG 199 of 2015 |
| Judgment of: | Judge Lucev |
| Hearing date: | 10 March 2016 |
| Date of Last Submission: | 10 March 2016 |
| Delivered at: | Perth |
| Delivered on: | 10 March 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr F Carles |
| Solicitors for the Applicant: | Carles Solicitors |
| For the Respondent: | No appearance |
ORDERS
The costs, charges and expenses of the administration of the bankruptcy of the Respondent and a distribution of dividends amongst creditors who have proved their debts in the estate shall proceed in accordance with Part VI Division 5 of the Bankruptcy Act 1966 (Cth) (“the Act”) as if the Respondent had filed a Statement of Affairs and those creditors had been stated to be creditors in it.
The Applicant pay interest to any creditors who are entitled to interest within s.153A(6) of the Act in the event that a dividend of 100 cents in the dollar has been paid to creditors.
The Respondent not be entitled to any surplus funds remaining after payment of the dividends to creditors and (if applicable) payment of interest payable on such of those debts as bear interest within s.153A(6) of the Act until he has lodged his duly completed Statement of Affairs in the required form in the office of the Official Receiver and the bankruptcy trustee has dealt with the claims of any further creditors disclosed in the Statement of Affairs.
The costs of and incidental to this application be paid out of the Respondent’s bankrupt estate to the Applicant in the sum of $9235 in accordance with the priority afforded under the Act.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 199 of 2015
| JENNIFER ELIZABETH LOW AS TRUSTEE OF THE BANKRUPT ESTATE OF LINFIELD MICHAEL SEAN MAYE |
Applicant
And
| LINFIELD MICHAEL SEAN MAYE |
Respondent
REASONS FOR JUDGMENT
(Edited ex tempore reasons)
The applicant seeks an order under s.146 of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”), that a distribution of dividends be made to those creditors of the bankrupt estate of the respondent who have proved their debts in accordance with Part VI, Division 5 of the Bankruptcy Act.
The Court notes that s.54 of the Bankruptcy Act provides that where a sequestration order is made, the person against whom that order is made must file a statement of affairs within 14 days of being notified of the bankruptcy.
Section 146 of the Bankruptcy Act provides that where a bankrupt fails to file a statement of affairs, the Court may order a distribution of dividends among creditors who have proved their debts as if the bankrupt had filed a statement of affairs and those creditors had been named in it.
The applicant trustee relies upon the affidavits of:
a)Jennifer Elizabeth Low sworn 8 May 2015 (“Low’s Affidavit”); and
b)Substituted Service and Notice to Creditors of Margaret Mary Woolford sworn 8 March 2016 (“Woolford’s Affidavit”).
Orders for substituted service were made on 24 December 2015 in Low as Trustee of the Bankrupt Estate of Maye v Maye [2015] FCCA 3485. Woolford’s Affidavit deposes as to substituted service on the respondent of the Application for substituted service, Low’s Affidavit and the Order for Substituted Service in accordance with that order.
Woolford’s Affidavit also deposes to notice of the hearing date of the application having been given to all known creditors of the respondent and to no response having been received from any of the known creditors (other than a query from Westpac which was addressed).
In relation to the application and requirements of s.146 of the Bankruptcy Act, Low’s Affidavit provides evidence of:
a)the respondent’s bankruptcy by way of sequestration order, the appointment of the Official Trustee as the trustee of the bankrupt estate and the applicant’s subsequent appointment in place of the Official Trustee (para 2);
b)attempts to obtain a Statement of Affairs from the respondent by the Official Trustee as the previous trustee of the respondent’s bankrupt estate as well as by the applicant (paras 4-6);
c)the respondent’s failure to file a Statement of Affairs (para 8);
d)the applicant’s efforts to identify creditors of the bankrupt estate of the respondent including having obtained a Veda Credit Report (para 15) and having advertised in The West Australian Newspaper in order to ascertain further creditors (para 17);
e)the provision of the details of the known assets of the bankrupt estate (paras 9-12 and 18-20);
f)the administration of the bankruptcy having been completed as far as is possible without the filing of the Statement of Affairs, except for the distribution of a dividend to creditors (para 21); and
g)the delay, which is causing prejudice to creditors (para 22).
In Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649; (2001) 117 FCR 1; (2001) 187 ALR 474 at [19] per Sackville J, the Federal Court set out the requirements in relation to the level of satisfaction required in an application under s.146 of the Bankruptcy Act. Those requirements have been mirrored by the Federal Magistrates Court in Official Trustee in Bankruptcy v Thor [2006] FMCA 1637 (“Thor”) and this Court in Harrison v Gangell [2013] FCCA 554 (“Harrison”) and Thomson as Trustee of the Bankrupt Estate of Pension v Pension [2015] FCCA 255 (“Pension”). In all the circumstances, the Court is satisfied, having had regard to the evidence in this case, that the applicant has advised all known creditors of the hearing and has taken appropriate steps to identify any further creditors of the bankrupt estate.
The Court is of the view that the respondent is aware of his bankruptcy and of his obligations under the Bankruptcy Act, and that it is reasonable to conclude in the circumstances and on the evidence that his conduct probably contravenes ss.54 and 77 of the Bankruptcy Act, and that there has been a deliberate failure by the bankrupt to file his statement of affairs.
The Court is satisfied that it has the jurisdiction to make the particular orders sought in this case by the applicant under s.146 of the Bankruptcy Act. The Court is also satisfied that the failure by the bankrupt to file his statement of affairs has prejudiced creditors and will incur and has already incurred further costs and will delay the administration of the estate: Rees (Trustee) in the matter of Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862, and Thor, Harrison and Pension referred to above. It is evident that any further attempts to compel the respondent bankrupt to file a statement of affairs or notify him of the orders sought pursuant to the application would also incur further costs and delay, and result in further disadvantage to the bankrupt’s creditors.
The Court notes the absence of the respondent in these proceedings, and that the matter has been called outside the Court today and that the respondent is not in attendance in these proceedings. The Court is satisfied on the basis of Woolford’s Affidavit that the respondent bankrupt would have been aware of today’s hearing date. In view of the history of the matter, the respondent bankrupt’s absence is not surprising.
In the circumstances, the Court adopts the rationale outlined in Official Trustee in Bankruptcy v Raeffaele [2003] FCA 328 at [7] per Allsop J, and applies it in the circumstances of this case, and finds that there is no necessity to make any further orders or any orders conditional upon further attempts to notify the bankrupt respondent or to state the effect of any orders made today. There will therefore be orders in the terms sought by the applicant. As to costs the relevant order will reflect, and be for the payment of, the costs of and incidental to the applicant trustee’s application, which the Court is satisfied are in the sum of $9235, out of the respondent’s bankrupt estate in accordance with the priority afforded under the Bankruptcy Act.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Lucev
Associate:
Date: 10 March 2016
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