Matheson v Insolvency and Trustee Service Australia - [2005] FMCA 481

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MATHESON v INSOLVENCY & TRUSTEE SERVICE AUSTRALIA

[2005] FMCA 481

BANKRUPTCY – Annulment.

Applicant:

FREDERICK JAMES MATHESON

Respondent:

INSOLVENCY & TRUSTEE SERVICE AUSTRALIA

File No:

BRG 528 of 2004

Delivered on:

14 February 2005

Delivered at:

Brisbane

Hearing date:

14 February 2005

Judgment of:

Jarrett FM

REPRESENTATION

The Applicant appeared in person

Solicitor for the Respondent:

Mr Henry

Solicitors for the Respondent:

Australian Government Solicitor

ORDERS:

That the application filed on 16 September, 2004 be dismissed;
That the applicant pay the respondent's costs of and incidental to the application fixed in the sum of $2,847.50, such costs to be paid within thirty (30) days of the date of this order.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 528/2004

FREDERICK JAMES MATHESON

Applicant

And

INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA

Respondent

REASONS FOR JUDGMENT
(ex tempore)

Frederick James Matheson was bankrupted on his own petition on

20 May 2002.
By his application filed on 16 September, 2004 the bankrupt applies for orders that his declaration to present a debtor's petition presented on

13 May 2002 be set aside, that his debtor's petition presented on

20 May 2002 be set aside, and his bankruptcy be annulled. The respondent to this application, the Insolvency and Trustee Service Australia, resists the application.
As Mr Henry, for the respondent, points out, there is no provision in the Bankruptcy Act1966 (“the Act”) for the making of orders such as those sought in paragraphs 1 and 2 of the application – that is, to set aside his declaration to present a debtor's petition, or to set aside his debtor's petition.
It seems to me that the application is, in truth, an application to annul the bankruptcy.
Applications to annul bankruptcy can be pursued pursuant to s.153B of the Act. There is no suggestion here that s.153A applies – that is, annulment consequent upon the payment of debts. It is fairly and squarely an application under section 153B(i) for an order that the Court annul the bankruptcy on the basis that it is satisfied that the debtor's petition ought not to have been presented, or ought not to have been accepted by the Official Receiver. The bankrupt’s case tends to towards the latter rather than the former – namely, that the Official Receiver ought not to have accepted his petition.
The basis of the bankrupt’s case is difficult to grasp, but in his affidavit filed on 16 September, 2004 he complains that prior to filing his notice of intention to present a debtor's petition, the respondent – and presumably he means somebody in the respondent's office – handed him a booklet entitled "Prescribed Information Regulation 4.11 November 2001". The applicant exhibits the booklet to his affidavit filed on 25 October, 2004 that he says he was given by the respondent. It is a booklet comprising nine pages, which makes reference to regulation 4.11 of the Bankruptcy Regulations.
He complains that when his notice of intention to present his debtor's petition was given to the respondent, he gave no acknowledgment of having received the prescribed information, as he is required to do by section 54A of the Act. The respondent points out that whether or not such a declaration was given is really beside the point in the present application because, by the terms of section 54D(2):
Failure by the Official Receiver to give a debtor information prescribed by the regulations does not affect the validity of the Official Receiver's acceptance under section 54C of a declaration presented under section 54A.
Thus, whilst the bankrupt might complain that his notice of intention to present a debtor's petition was not validly accepted because he had not provided the appropriate acknowledgment, there seems to be nothing in that argument.
In any event, the inquiry under . 153B is not whether the notice of intention to present a debtor's petition ought not to have been accepted by the Official Receiver but, rather, whether the debtor's petition ought not to have been received.
In that respect, the bankrupt has two complaints. The first is that he says he was misled by some information in the prescribed booklet that suggested to him that he might choose his trustee. As it turned out, the bankrupt did not choose a trustee but opted to do nothing in that respect and that had the effect of appointing the Official Receiver his trustee, at least at the commencement of the bankruptcy.
He says that he was misled because he did not know, and was not told that the Official Receiver might transfer the trusteeship to others. Ultimately, the Official Receiver arranged for two other trustees to take over the administration of the bankrupt’s estate. The bankrupt alleges that by doing so it effectively falsified the statement in the prescribed information booklet that he could chose his own trustee. Although he did not articulate it in this way, it seems to me that his argument is that he made a positive choice to have the Official Receiver as his trustee and he was thereafter deprived of that choice because of transfer of the trusteeship of his estate.
The bankrupt frames his case on this aspect in two ways: he says first of all, that the conduct of ITSA was misleading or deceptive in breach of s.52 of the Trade Practices Act 1974 (“the TPA”). Section 52 of the TPA proscribes certain conduct by corporations in the course of trade or commerce. "Corporation" is defined in s 4 of the TPA to mean a foreign corporation or a trading corporation formed within the limits of Australia, or a financial corporation so formed, or a body corporate that is incorporated in a Territory, or a holding company of a body corporate of a kind referred to in paragraphs (a), (b) and (c) of that definition.
It is difficult to conceive, for the moment, that either the Official Receiver or ITSA are corporations for the purposes of s.52 of the TPA. I do not lose sight of the fact that s.2A of the TPA applies that Act to the Commonwealth and to Commonwealth authorities. In any event and despite my view to the contrary, for the purposes of this judgment I am prepared to assume that the TPA applies to both the respondent and the Official Receiver.
The issue, however, becomes whether the conduct of which the bankrupt complains is conduct in “trade or commerce”. I do not think that it is. The authorities are clear on what constitutes “trade or commerce”. It is difficult to conceive that services such as those offered by the Official Receiver or the respondent satisfy the requirements of the cases when it comes to the conduct being in trade or commerce: see, for example, the discussion about this topic in Concrete Constructions (New South Wales) Pty Ltd v Nelson (1990) 169 CLR 594, Hearn v O'Rourke [2003] FCAFC 78. I do not think that a misleading and deceptive conduct case is made out.
The second basis upon which this aspect of the matter is put, is that the conduct of the respondent was fraudulent. Presumably, the bankrupt means by that, that there was a representation of fact that the respondent knew at the time to be false, or about which it did not care whether it was true or false, and that it intended him to act upon that representation. There is no evidence from which I can make a finding that the representation was false. The representation that the bankrupt could choose his own trustee seems to me to have been at all times true. For that reason, no case of fraud is made out.
The core inquiry, of course, under s.153B is whether the debtor's petition ought not to have been accepted by the Official Receiver. The respondent's submissions point out that acceptance or rejection of a debtor's petition is governed by s.55 of the Act. Section 55(2)(a) provides that an Official Receiver must reject a debtor's petition in certain circumstances. None of those circumstances apply here. Moreover, s.55(3) provides that the Official Receiver may reject a debtor's petition in certain circumstances. Of relevance is s.55(3)(a) which provides that the Official Receiver may reject a debtor's petition if the petition does not comply substantially with the approved form.
This is the second ground upon which the bankrupt says that the petition ought to have been rejected. He draws my attention to the copy of the petition and statement of affairs exhibited to the affidavit of Cheryl Ann Rogers filed on 11 October, 2004. On the front page of the statement of affairs, at the very bottom, appears a space for a name: both a family name and given names. He says that that is incomplete and, because it is incomplete, it ought never have been accepted.
The power to reject a creditor's petition under s.55(3)(a), however, extends only to petitions that do not comply substantially with the approved form. Substantial compliance can sometimes be a difficult matter to grapple with but, in this case, I have no hesitation in concluding that the prescribed form has been substantially complied with. I am sure that if there were other areas in which the forms were incomplete or otherwise not complied with the bankrupt would have taken me to them. The only area highlighted in his case, however, is the failure to insert his name on the front page of the statement of affairs. I am satisfied that the prescribed forms were substantially complied with.
He complains, further, that on the third page of the statement of affairs a person not identified by him has inserted some additional words without his consent. He complains that about two-thirds of the way down the page the words, "Mrs Geraghty", have been inserted, as well as the words, "to bankrupt". There is nothing in the point. Even if I was to assume that those words were inserted by somebody in the respondent's office, it seems to me that they do nothing towards invalidating the debtor's petition. If I was to speculate on the matter, it would seem that the words were inserted by somebody who has been assessing the form and making inquiries, but it was not suggested by the bankrupt that the insertion of those words in the debtor's petition has worked any particular prejudice to him.
I am satisfied that the debtor's petition complied substantially with the approved form. By s.55(3)(a), the Official Receiver may reject a debtor's petition in prescribed circumstances, but none of those apply in the present case.
The inquiry under s.153B is an inquiry which is really limited to circumstances where a debtor's petition has been accepted, notwithstanding that the conditions precedent set out in s.55 for its acceptance were not satisfied: see, for example, re Abass ex parte Official Trustee in Bankruptcy (1995) 57 FCR 140. In the present case, however, the pre-conditions to the acceptance of a petition were satisfied. There was nothing of a discretionary nature that called for the rejection of the petition by the Official Receiver and, in the circumstances, it seems to me that there is no basis to say that it ought not to have accepted the petition.
The application is, therefore, dismissed.

RECORDED : NOT TRANSCRIBED

There is an application for costs following on from my dismissal of the application. Costs should follow the event. There is no good reason why costs should not follow the event, and I will make an order that the applicant pay the respondent's costs of this application.
In terms of the quantum of those costs, as is the practice in this Court, I intend to fix an amount according to schedule 1 of the Federal Magistrates Court Rules2001. It seems to me that the following amounts are appropriate: a stage 1 fee of $1820, together with a daily hearing fee and an advocacy loading. I will allow the daily hearing fee at the half-day hearing rate of $685, increased by 50 per cent, in accordance with rule 21.14 of the FMCR. That is a total of $2,847.50.
I order that the applicant pay the respondent's costs of and incidental to the application fixed in the sum of $2,847.50, such sum to be paid within thirty (30) days of today.

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

Associate: S Haysom

Date: 15 April 2005