Miao and Inspector-General in Bankruptcy
[2019] AATA 1921
•17 July 2019
Miao and Inspector-General in Bankruptcy [2019] AATA 1921 (17 July 2019)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2018/1329
Re:Shirley Miao
APPLICANT
AndInspector-General in Bankruptcy
RESPONDENT
DECISION
Tribunal:Senior Member R. Pintos-Lopez
Date:17 July 2019
Place:Melbourne
The Tribunal affirms the decision under review.
[sgd]........................................................................
Senior Member R. Pintos-Lopez
Catchwords
BANKRUPTCY – whether to refuse to review a decision of a trustee who had filed a notice of objection to the discharge of the Applicant from bankruptcy – failure to produce documents to the trustee on request – conduct of the trustee - decision affirmed.
Legislation
Bankruptcy Act 1966
Cases
Nguyen v Pattison (2005) 142 FCR 561
RE Woodman and Inspector-General in Bankruptcy [1996] AATA 115
RE Lavin and Inspector-General in Bankruptcy [2016] AATA 798
RE Neffati and Inspector-General in Bankruptcy [2016] AATA 941
RE Neffati and Inspector-General in Bankruptcy [2017] AATA 1108RE Pattison and Inspector-General in Bankruptcy [2007] AATA 1517
REASONS FOR DECISION
Senior Member R. Pintos-Lopez
17 July 2019
The Applicant applies under s 149Q(b) of the Bankruptcy Act 1966 (the Act) seeking review of a decision of a delegate of the Inspector-General in Bankruptcy (referred to herein as the Inspector-General or the Respondent), dated 6 March 2018, made under s 149K of the Act, refusing to review a decision of a trustee who had filed a notice of objection to the discharge of the Applicant from bankruptcy.
For the reasons that follow, the Tribunal affirms the decision under review.
BACKGROUND
On 3 July 2014, the Applicant became a bankrupt by sequestration order and a trustee was appointed as trustee of her estate.
On 13 December 2017, the trustee filed a notice of objection to discharge the bankruptcy under the Act on the grounds that the Applicant failed to:
(a)disclose any particulars of income or expected income as required under s 149D(1)(d) of the Act;
(b)provide written information, when requested in writing by the trustee, about her property, income or expected income under s 149D(1)(e) of the Act; and
(c)comply with s 77(1)(a)(ii) to deliver her passport to the trustee under s 149D(1)(ia) of the Act.
The effect of the trustee’s notice of objection to discharge is to extend the bankruptcy such that the Applicant will be discharged from bankruptcy on 28 January 2023.[1]
[1] The Respondent noted in the reasons for refusing to perform a review of the objection, dated 6 March 2018, that the Applicant will be discharged from bankruptcy on 28 January 2023 rather than 28 January 2021 as the trustee stated in the notice of objection.
On 8 January 2018, the Applicant requested the Respondent to review the trustee’s objection to discharge decision.
On 29 March 2018, the trustee notified the Respondent that he ceased to object to the Applicant’s discharge from bankruptcy on the ground that she had failed to deliver her passport to the trustee.
The Applicant applies to the Tribunal for a review of that decision, that is, whether or not to perform a review of the trustee’s decision and not, as the cases cited below make clear, to review the decision itself.
The Bankruptcy Act
Section 139U(1) of the Act requires a bankrupt to give evidence of income to the trustee providing:
A bankrupt must, as soon as practicable, and in any event not later than 21 days, after the end of a contribution assessment period, give to the trustee:
(a) a statement:
(i) setting out particulars of all the income that was derived by the bankrupt during that contribution assessment period; and
(ia) setting out particulars of all the income that was derived by each dependant of the bankrupt during that contribution assessment period; and
(ii) indicating what income (if any) the bankrupt expects to derive during the next contribution assessment period; and
(iii) indicating what income (if any) the bankrupt expects each dependant of the bankrupt to derive during the next contribution assessment period; and
(b) such books evidencing the derivation of the income referred to in subparagraph (a)(i) as are in the possession of the bankrupt or the bankrupt can readily obtain.
…
Section 139L(1) of the Act provides that the meaning of “income” in Division 4B of Part VI of the Act (concerning the recovery of money and property and the payment of contributions by a bankrupt to the bankrupt’s estate) has its ordinary meaning, subject to some qualifications.
The Act contains certain provisions that deal with circumstances in which a bankrupt claims not to be in receipt of income where the trustee has grounds for believing that the bankrupt has or will receive income or fails to provide particulars of income.[2]
[2] For example, s 139Z of the Act that applies where a bankrupt claims not to be in receipt of income, and provides, in summary, that if a bankrupt does not provide information about his or her derivation of income but the trustee has reasonable grounds for believing that the bankrupt is likely to derive, or derived, income, or income of that class, then for the purpose of making an assessment, the trustee may determine that the bankrupt is likely to derive, or derived income. In turn, s 146 of the Act provides that the Court may, on the application of the trustee, order the distribution of dividends amongst creditors, in circumstances where the bankrupt has failed to file a statement of affairs, as if the bankrupt had filed a statement of affairs.
Part VII of the Act provides for discharge and annulment of bankruptcy. That Part, at Division 2, entitled discharge by operation of law, contains three subdivisions dealing with discharge after a certain period, objections and review of objections.
Section 149 of the Act provides, in substance, for automatic discharge from bankruptcy at the end of the period of three years from the date on which the bankrupt filed his or her statement affairs.
Section 149A(1) of the Act provides for circumstances in which the bankruptcy can be extended when objection is made:
If an objection to the discharge of a bankrupt has taken effect in accordance with section 149G, then, unless the objection is withdrawn or cancelled, the reference in whichever of subsections 149(2), (3) and (4) applies in relation to the bankrupt to the period of 3 years from the date on which the bankrupt filed his or her statement of affairs is taken to be a reference to the prescribed number of years from the prescribed date.
Section 149B of the Act provides in relation to an objection to discharge:
(1) Subject to the following provisions of this Subdivision, at any time before a bankrupt is discharged from bankruptcy under section 149, the trustee may file with the Official Receiver a written notice of objection to the discharge.
(2) The trustee of a bankrupt’s estate must file a notice of objection to the discharge if the trustee believes:
(a) that doing so will help make the bankrupt discharge a duty that the bankrupt has not discharged; and
(b) that there is no other way for the trustee to induce the bankrupt to discharge any duties that the bankrupt has not discharged.
(Emphasis added.)
Section 149D(1) provides in relation to the grounds of objection:
The grounds of objection that may be set out in a notice of objection are as follows:
…
(d) the bankrupt, when requested in writing by the trustee to provide written information about the bankrupt’s property, income or expected income, failed to comply with the request;
(da) …
(e) the bankrupt failed to disclose any particulars of income or expected income as required by a provision of this Act referred to in subsection 6A(1) or by section 139U;
….
Section 149K provides for an internal review of objection:
(1)The Inspector-General may review a decision of the trustee to file a notice of objection:
(a) on the Inspector-General’s own initiative; or
(b) if requested to do so by the bankrupt for reasons that appear to the Inspector-General to be sufficient to justify such a review.
…
(3) A request by the bankrupt to the Inspector-General for the review of such a decision must:
(a) be in writing and given to the Inspector-General not later than 60 days after the day on which the bankrupt is notified of the trustee’s objection; and
(b) be accompanied by:
(i) a copy of the notice of objection; and
(ii) any documents on which the bankrupt relies in support of the request.
(5) Within 60 days after the request is received, the Inspector-General must:
(a) decide whether to review the decision; and
(b) if the Inspector-General decides to review the decision— make his or her decision on the review.
(Emphasis added.)
Section 149N of the Act provides for the decision on review:
(1) On a review of a decision, if the Inspector-General is satisfied that:
(a) the ground or grounds on which the objection was made was not a ground or were not grounds specified in subsection 149D(1); or
(b) there is insufficient evidence to support the existence of the ground or grounds of objection; or
(c) the reasons given for objecting on that ground or those grounds do not justify the making of the objection; or
(d) a previous objection that was made on that ground or those grounds, or on grounds that included that ground or those grounds, was cancelled;
the Inspector-General must cancel the objection.
(1A) An objection must not be cancelled under subsection (1) if:
(a) the objection specifies at least one special ground; and
(b)there is sufficient evidence to support the existence of at least one special ground specified in the objection; and
(c) the bankrupt fails to establish that the bankrupt had a reasonable excuse for the conduct or failure that constituted the special ground.
For this purpose, special ground means a ground specified in paragraph 149D(1)(ab), (d), (da), (e), (f), (g), (h), (ha), (ia), (k) or (ma).
(1B) In applying subsection (1A), no notice is to be taken of any conduct of the bankrupt after the time when the ground concerned first commenced to exist.
(2) The cancellation does not take effect until:
(a) the end of the period within which an application may be made to the Administrative Appeals Tribunal for the review of the decision of the Inspector-General; or
(b) if such an application is made—the decision of the Tribunal is given.
(3) If the Inspector-General is not satisfied as mentioned in subsection (1), the Inspector-General must confirm the decision.
(Emphasis added.)
Section 149Q provides for review of decisions:
An application may be made to the Administrative Appeals Tribunal for the review of:
(a) a decision of the Inspector-General on the review of a decision of the trustee to file a notice of objection; or
(b) a decision of the Inspector-General refusing a request to review a decision of the trustee to file a notice of objection.
(Emphasis added.)
The relevant authorities
A number of previous decisions have considered an objection to discharge by a trustee, review of that decision by the Inspector-General, which is referred to as an internal review of objection and subsequent review by the Tribunal.
In Neffati and Inspector-General in Bankruptcy [2017] AATA 1108, the Tribunal stated:
… Mr Neffati sought review by the Tribunal of the respondent’s decision not to conduct a review as requested. His application raised a preliminary question concerning the scope of the Tribunal’s power, in particular whether, if the Tribunal set aside the decision not to conduct a review, it had jurisdiction and power to conduct a review itself. In Neffati and Inspector-General in Bankruptcy [2016] AATA 941, the Tribunal determined that the answer to that question was “No” and that the Tribunal’s power was limited to reviewing the respondent’s decision to refuse to conduct a review.[3]
[3] [7].
The Tribunal stated further:
Section 149K does not elaborate on what reasons might appear “sufficient to justify such a review” but the context in which that expression appears gives it meaning.
Review of a notice of objection to discharge is not as of right. Section 149K(1)(b) acts as a gateway, the purpose of which the Tribunal described in Jonathan Durrant Woodman and Inspector-General in Bankruptcy [1996] AATA 115 at [19], as follows:
The subject words have a purpose and in the view of the Tribunal they are there to ensure that requests of a frivolous nature or those which lack any substance, merit or foundation do not lead to unwarranted review of decisions by trustees or the official receiver to file a notice of objection. On the other hand, the subject words should not be interpreted in such a way as to preclude or impede a bankrupt from obtaining an appropriate internal review. Whilst a bankrupt has the right to have the decision of the trustee or Official Receiver reviewed by the Tribunal in any event that is no answer to an unwarranted denial of internal review by the Inspector-General.
Amendments to the Act since the decision in Woodman mean the Tribunal’s decision that a review should be conducted in that case, and to conduct the review itself, is no longer open to the Tribunal. However, the comments in Woodman about the purpose of the legislative scheme remain relevant.
In requiring that there be reasons “sufficient” to justify a review, s 149K(1)(b) sets a relatively low threshold not intended to preclude appropriate requests for internal review. Following Woodman, a review will be appropriate if it is not frivolous or if it cannot to be said to be without merit or foundation.
…
In Woodman, the Tribunal said at [23] that “...one must have regard to the whole of the circumstances surrounding the filing of the notice in the light of the relevant material now before the Tribunal”. The Tribunal took into account that five years was “...a significant extension of the period of time during which the applicant is obliged to carry out his various duties and obligations under the Act and during which his after-acquired property will vest in his trustee. It is such as to require, in our view, an examination as to whether such a period of time is warranted having regard to all of the relevant circumstances”: at [23].[4]
[4] [9]-[12], and [16]. See also Lavin and Inspector-General in Bankruptcy [2016] AATA 798 at [21].
In Re Pattison and Inspector-General in Bankruptcy [2007] AATA 1517, the Tribunal stated:
…the trustee relied upon s 149D(1)(ma) and, being a special ground, the objection could be cancelled if there was an intentional failure to disclose property and Mr Ogilby fails to establish a reasonable excuse for the failure.
…
The introduction of special grounds of objection was by the Bankruptcy Legislation Amendment Act 2002 (Cth). The explanatory memorandum to the amendments to ss 149D and 149N stated:
164 When filing an objection, the trustee must set out the ground of objection, the facts relied on to support the ground and the reasons for filing an objection. Case law establishes that punishing the bankrupt, of itself, is not a lawful reason. The only valid reason for filing an objection has been held to be to advance the trustee’s administration of the bankruptcy. This approach does not encourage bankrupts to cooperate with trustees.
Special grounds of objection
165 The amendments propose to address this weakness in the present law by identifying some existing grounds, and adding some new grounds, as special grounds. In these special ground cases, the trustee will not need to show that filing the objection will advance the administration, only that the special ground existed.
It was submitted for the trustee that the ground exists if a bankrupt intentionally
fails to disclose any beneficial interest in any property, irrespective of value. It is difficult to accept this interpretation. It implies that a bankrupt must disclose every item he owns if he is aware of its existence whether or not he believes it has a commercial or resale value...[5]
[5] [7] and [18].
In Nguyen v Pattison (2005) 142 FCR 561, Weinberg J considered “special grounds” under s 149N of the Act:
The background to this matter may be briefly summarised. The appellant was made bankrupt on 25 July 2000. However, he did not file his statement of affairs until 17 October 2000. The trustee’s objection to discharge, dated 2 September 2003, was based upon the appellant’s failure to provide details of his income, and to pay the sum of $4495.[6]
[6] [2].
His Honour considered the provisions by reference to the reasons provided by the Federal Magistrate’s decision, which he approved and which were the subject of the appeal.
His Honour referred to the history behind the introduction of ss 149A to 149N. He noted that earlier versions of those provisions had been considered by this Court in Re Ansett (1995) 56 FCR 526 (“Ansett”), Inspector-General in Bankruptcy v Nelson (1998) 86 FCR 67 (“Nelson”), and Wharton v Official Receiver in Bankruptcy (2001) 107 FCR 28 (“Wharton”).
In Ansett, Olney J said:
The legislative policy seems to be clear enough. Section 149D(1) sets out some 14 grounds upon which an objection may be based. The mere existence of an available ground does not automatically give rise to an extension of the bankruptcy. To achieve that end the trustee must give notice setting out the ground he relies upon, the evidence which establishes that ground and the reason why he objects to the discharge on that ground. The latter requirement suggests that the trustee must address the relevance of the bankrupt's conduct in relation to the ground of objection in the context of the administration of the estate and to make a judgment as to whether that conduct provides a basis or reason for the bankruptcy to be extended. Further, the trustee is required to expose his reasoning in the notice.
In Nelson, it was determined that the trustee was required to consider whether there was any reason to object to discharge, beyond the mere fulfilment of one or more of the grounds upon which objection could be taken.
In Wharton, I referred to the provisions dealing with objections to discharge, as they then stood, in the following terms:
[77] Section 149A is an important provision. It provides a strong incentive to bankrupts to co-operate with their trustees during the administration of their estates. In some circumstances, an incentive of that type is plainly necessary. However, unless the section is construed in a sensible manner, it is capable of operating oppressively. It is reasonable to assume that trustees who make requests for information from bankrupts, including those concerning their income, will make due allowance for what might be regarded as the ordinary exigencies of life. Requests for information are often not met in as timely a manner as they ought to be. Some delays may be regarded as excusable while others will properly give rise to the filing of notices of objection. A bankrupt cannot ignore requests from his or her trustee. A particularly lengthy delay in responding to a request may trigger a notice of objection to discharge which is entirely justifiable. A relatively short delay in answering a request may be a different matter. Section 149D(1)(d) must be construed in the light of the requirement in s 149B(2)(b) that the trustee must believe that the filing of a notice of objection is the only way to induce the bankrupt to discharge his duties under the Act. It is plainly a course of last resort.
[78] The fact that the trustee may cease to object or withdraw an objection prior to the expiry of that eight year period offers scant comfort to a bankrupt who may be involved in a bitter and protracted dispute with the trustee about a host of matters connected with his bankruptcy. The proper approach to the construction of s 149A is to ensure that the grounds upon which a notice of objection is filed are sufficient to justify taking that course.
After referring to these authorities, his Honour observed that the current version of these provisions had been enacted in 2002. The amendments created a special category of grounds of objection, namely “special grounds”. Those grounds, if made good, would result in an objection to discharge being upheld without any additional justification being provided for continuation of the bankruptcy.
In discussing the purpose of the amendments, the federal magistrate noted that before their enactment, trustees had often found it difficult to maintain objections. Frequently, the inspector-general, the Administrative Appeals Tribunal, and the Federal Court had cancelled objections on review. The reasons varied. Some trustees had found it difficult to differentiate clearly between the grounds of an objection, and the reason for filing the objection. Moreover, on occasion, a bankrupt’s challenge to an objection had been upheld simply because either during a hearing, or just before it occurred, the bankrupt eventually had supplied information long sought by the trustee, the non-supply of which had formed the basis of the objection. Such decisions had been thought to undermine a prime purpose of the objection regime which was to induce a bankrupt to cooperate, promptly, with his or her trustee.
His Honour referred to several commentaries regarding the amendments to the Act, all of which noted that the aim was to tighten the obligations imposed upon the bankrupt, and to strengthen the trustee’s hand. Indeed, the explanatory memorandum, to which reference has already been made, stated that one of the objects of the Bill was to:
(c) strengthen the objection-to-discharge provisions of the Bankruptcy Act 1966 (the Act) by making it easier for trustees to lodge objections to a person’s discharge from bankruptcy and harder for bankrupts to sustain challenges to objections.
The Federal Magistrate said that there appeared to be no reported case on the operation of the “special grounds” provisions in the Act. That is correct, so far as I can tell, though Beaumont ACJ briefly alluded to those provisions in Pollack v Lombe [2004] FCA 362. In any event, the Federal Magistrate observed at [36]:
It appears clear that the legislature intended that establishing a ‘special ground’ for giving a notice objecting to a bankrupt’s discharge is now intended to be sufficient evidence to demonstrate that it is appropriate to continue a bankruptcy beyond 3 years. It appears that the intention of the amendments is to deem a ‘special ground’ sufficient evidence of the basis for continuing a bankruptcy, without reference to the considerations discussed in Wharton and Nelson (above). Whilst section 149J was said to offer scant comfort (see Wharton, supra), it now remains the only comfort for a bankrupt the subject of an objection on a ‘special ground’, such as the applicant.[7]
[7] [31]-[38].
RELEVANT FACTS
On 3 July 2014, the Applicant became a bankrupt and the trustee was appointed.
The events preceding the bankruptcy of the Applicant concerned a dispute between the Applicant and the owners’ corporation of a commercial property, then owned by the Applicant, in Footscray, Victoria.
There have been various disputes between the Applicant and the Respondent during the period of the bankruptcy to date. One such dispute has concerned the proper address of the Applicant. The Respondent submits that the trustee repeatedly sought to obtain from the Applicant an address to which he could send correspondence. The Applicant, in her submissions, which are referred to below, states that the trustee is at fault in relation to his inability to obtain her address.
During the course of the bankruptcy, the Applicant made a number of allegations against the trustee in relation to his conduct, including that the trustee had fabricated costs in relation to the property, deceived the Victorian Land Title’s Office to transfer the premises into his name, and misappropriated the funds of the bankruptcy for the purpose of remunerating himself.
From the commencement of the bankruptcy until 2017, at which time the trustee filed a notice of objection to discharge the Applicant from bankruptcy, the trustee made repeated attempts to obtain from the Applicant, documents and information regarding, among other matters, the Applicant’s income and the Footscray property.
In 2014, the Applicant commenced proceedings in the Federal Court of Australia seeking the return of her passport from the trustee in order for her to travel to China to care for her ailing mother. The trustee had conditioned the return of her passport, in part, on the Applicant providing him with financial information.
On 23 January 2015, the Applicant provided the trustee with a statement of affairs, which she had filled out and signed, in relation to her present financial position. This included details of her income over the past 12 months and details of income that she expected to receive in the next 12 months from the date of the statement of affairs.
At Part A of the statement of affairs, concerning personal details, the Applicant stated that she had no accountant, partner, solicitor or dependents. In response to question nine of Part A requesting the Applicant to provide details of her income before tax over the past 12 months, the Applicant wrote that she had received a total of $3200 in rent. In response to question 10, requesting her to provide details of income before tax that she expected to receive in the next 12 months, the applicant wrote in the space entitled “any other source”, that she expect to receive $25,600 in rent. The applicant stated at question 11 that she had been unemployed for 20 years and that her last occupation had been as a secretary.
Part C of the statement of affairs requested the Applicant to provide details of her assets. The Applicant stated that she had $1,500.82 in cash and that she had $0.82 in an account. In response to question 28, the Applicant stated that she had acquired commercial property in Footscray in 2003, that the amount paid to acquire it was $175,000. She further stated that the estimated resale value of the property was $800,000 and that she owed to creditors who held security over the property $59,242.17. The gross rent for the property was, the Applicant stated, $350 per week. Question 37 of Part C requested the Applicant to provide details regarding assets or items of value other than her general household furniture. The Applicant marked that she had no such assets or items of value.
On 27 January 2015, Beach J ordered that the trustee consent to the Applicant leaving Australia and, if in his possession, to return her passport. In addition, his Honour ordered that the Applicant was to provide the trustee with a statement of affairs.
Following his Honour’s orders, the trustee made further requests to the Applicant for her to provide him with income information for further contribution assessment periods.
On 6 July 2015, the Applicant sent an email to the trustee, in response to the email from the trustee, dated 3 July 2015, directing the Applicant to complete an income questionnaire for the period 3 July 2015 to 2 July 2016 and provide evidence of her actual income for the period 3 July 2014 to 2 July 2015. In the email, the Applicant stated:
My sole income (rent paid by the tenants) has been robbed by you and your associates since 18 May 2015. My income is zero.
Your extortion criminal offences will be charged according to Crimes Act 1958. Do not harass me again.[8]
[8] T-160
From 2015 until 2017, the trustee continued to make requests for the Applicant to provide him with documents and information regarding the Applicant’s income and the Footscray property. The requests contained deadlines, which the Applicant did not meet.
During the hearing, the Applicant stated that she had told the trustee and his assistant on various occasions that her income was zero. She stated in relation to some of the letters sent by the trustee that she had not received them or that she had received a letter but had not opened it. The Applicant stated that in relation to the various questionnaires sent by the trustee that she had already filled out one questionnaire and that she had already told the trustee or provided information about her income.[9]
[9] The Respondent’s letter of 6 March 2018, providing reasons for refusing to perform a review of the notice of objection, sets out much of the correspondence before the Tribunal. The Respondent’s letter referring to correspondence and the materials before the Tribunal, leaving aside the question of who is responsible for the impasse concerning communication between the Applicant and the trustee, evidence a pattern of unsuccessful attempts by the trustee to provide information to the Applicant, including by providing letters telling her of her obligations as an undischarged bankrupt or requesting that she provide details of her income, the return of that correspondence at times marked “return to sender”.
The Applicant stated that from October 2016 until November 2017 she had been in China. She stated that when she was back in Australia that she lived with a friend who took pity on her in their garage. She stated that she paid for her food with a small amount of money. She stated that in 2014 she received about $45,000 from her parents. The Applicant stated that in 2015 she had received around $3,000 and that in 2016 she had received $2,000 to $3,000.
Many of the matters raised by the Applicant and indeed some of the matters on which she was cross-examined by the Respondent are not directly relevant to the question posed under s 149K(1) of the Act as to whether the reasons for a request by a bankrupt to review a trustee’s objection are sufficient to justify a review. For example, the mere allegations raised by the Applicant in relation to the conduct of the trustee, the costs of works incurred by the trustee in relation to the bankruptcy, whether those were proper or actual costs have not been established by evidence and the allegations themselves, therefore, are not directly relevant to the present application. However, the circumstances surrounding the conduct of the bankruptcy and the notice of objection, including the grounds relied upon by the trustee, may be matters relevant to the exercise of discretion under s 149K(1) of the Act.
On 13 December 2017, the trustee filed a notice of objection to discharge on the grounds under ss 149D(1)(d), (e) and (ia) of the Act.[10] The notice of objection prepared by the trustee contains the evidence relied upon to support the existence of special grounds under s 149D(1)(d) and (e) of the Act. The notice contains a summary under each of the special grounds of the circumstances, such as correspondence, relevant to the trustee’s decision and relied upon by him as evidence.
[10] The Respondent’s letter of 6 March 2018, providing reasons for refusing to perform a review of the notice of objection, similarly sets out the relevant correspondence.
The trustee in the objection to discharge states, in relation to the claim that the Applicant failed to disclose any particulars of income or expected income as required under s 149D(1)(e) of the Act, that:
On 8 July 2014, I wrote to the bankrupt via registered mail, advising her of her obligations as an undischarged bankrupt. As the bankrupt had failed to provide a residential address, correspondence was addressed to a commercial property of the bankrupt, situated at Shop 2,144-148 Nicholson Street, Footscray ("the Footscray address”) at her request.
A postal address of the bankrupt at PO Box 2438, Footscray ("the PO Box address") was subsequently identified.
On 23 January 2015, I hand delivered a further copy of the above letter to the bankrupt, advising her of her obligations as an undischarged bankrupt.
In a letter dated 5 January 2015, hand delivered to the bankrupt, the bankrupt was advised to provide details of her income in order to enable a request for overseas travel to be considered.
On 3 July 2015, I wrote to the bankrupt via email directing her to complete an income questionnaire for the Contribution Assessment Period (“CAP”) 3 July 2015 to 2 July 2016. The bankrupt was also directed to provide evidence of her actual income for the CAP 3 July 2014 to 2 July 2015. The bankrupt was required to return this information to my office by 24 July 2015.
On 8 July 2016, I wrote to the bankrupt via email directing her to complete an income questionnaire for the CAP 3 July 2016 to 2 July 2017. The bankrupt was also directed to provide evidence of her actual income for the CAP 3 July 2015 to 2 July 2016. The bankrupt was required to return this information to my office by 25 July 2016.
This email was returned undelivered.
On 23 September 2016, I wrote to the bankrupt at the PO Box address enclosing a copy of my correspondence dated 8 July 2016.
On 2 June 2017, I wrote to the bankrupt via email and to the Footscray address reminding her of her obligation to provide the outstanding income information. The email was returned undelivered.
On 6 June 2017, I issued a copy of my letter of 2 June 2017 to the bankrupt at the PO Box address.
On 23 June 2017, I wrote to the bankrupt at the PO Box address directing her to complete an income questionnaire for the CAP 3 July 2017 to 2 July 2018. The bankrupt was also directed to provide evidence of her actual income for the CAP 3 July 2016 to 2 July 2017. The bankrupt was required to return this information to my office by 30 July 2017.
To date the bankrupt has failed to return any of the information requested.[11]
[11] T-63 to T-64.
In relation to the claim that the Applicant, when requested in writing by the trustee to provide written information about the her property, income or expected income, failed to comply with the request under s 149D(1)(d) of the Act, the trustee states:
At the date of bankruptcy, the bankrupt was the registered proprietor of the Footscray address, more particularly described in certificate of title Volume 09868 Folio 778. The property was unencumbered at the date of my appointment.
On 23 July 2014, I wrote to the bankrupt via registered post at the Footscray address, informing her of my intention to realise the property and directing her to deliver up the certificate of title or advise of its whereabouts.
The property is subdivided into two (2) retail shops and is subject to two (2) tenancies, the leases being entered into by the bankrupt in November 2014. My investigations disclosed that the bankrupt collected two (2) months rent from each tenant, totalling $7,040, and a security bond from each tenant totalling $7,040.
On 22 May 2015, I wrote to the bankrupt via email informing her that any rental income attached to the commercial property vests in me as Trustee and directing her to deliver up any rental income collected by her subsequent to the date of bankruptcy.
On 23 September 2016, I wrote to the bankrupt at the Footscray address directing her to pay the security bond and rental income collected subsequent to the date of bankruptcy into the estate bank account by no later than 30 September 2016. The bankrupt was also requested to confirm if she had possession of the certificate of title and deliver it to my office.
In a letter dated 20 October 2016, sent to the bankrupt via email, the bankrupt was requested to confirm receipt of my letter dated 23 September 2016 and provide a response with regards to the location of the certificate of title and funds collected as a security deposit.
On 2 June 2017, I wrote to the bankrupt via email and to the Footscray address directing her to deliver up the monies held by her with respect to the security bond and rent collected by her.
The email was returned undelivered and on 6 June 2017, I issued a copy of my letter of 2 June 2017 to the PO Box address.
The bankrupt failed to deliver up the certificate of title or disclose its location, necessitating an application for the issue of a new title.
To date the bankrupt has failed to deliver up or provide the location of the monies collected by her with regards to the security bond and rental payments.[12]
[12] T-65.
On 8 January 2018, the Applicant requested the Respondent to review the notice of objection to discharge on the basis that:
(a)she had concerns about alleged misconduct of the trustee and the owner of a real estate business;
(b)the Applicant had disclosed all of her income from property to the trustee and that he had repeatedly and maliciously accused her of failing to comply;
(c)the Applicant acknowledged that she had not delivered her passport to the trustee but stating that her reason for not doing so was because her passport is her only official identity document and she had concerns that she would be unable to obtain her passport, based upon her previous experience, from the trustee; and
(d)the trustee had repeatedly sent correspondence to an invalid email address, rather than directly mailing those letters to her postal address.
On 19 January 2018, the Respondent wrote to the Applicant stating that the Inspector-General may review a decision of the trustee to file a notice of objection if requested to do so by the bankrupt for reasons that appear to be sufficient to justify such a review. The Respondent requested that the Applicant provide the following information:
(a)Whether she had advised the trustee of her updated email address and postal address, in accordance with her duty under s 80 of the Act and requesting details and copies of correspondence demonstrating when she had advised the trustee.
(b)Copies of correspondence sent to the trustee demonstrating that she had provided the trustee with evidence of her income and property, along with the income questionnaire required by the trustee.
(c)Any additional reasonable excuse(s) for not delivering her passport to the trustee, in accordance with the duty under section 77(1)(a)(ii) of the Act.
On 27 January 2018, the Applicant responded to the Respondent’s letter of 19 January 2018 stating that she:
(a)had verbally advised the trustee of her postal address during a hearing held on 11 August 2014 and she had not changed her postal address since that date;
(b)had not been able to contact the trustee via email while overseas;
(c)had disclosed information as to her property and income in her statement of affairs;
(d)had verbally advised the trustee at hearings held in 2014 that she did not derive an income and that the trustee has verified her income as nil with the Australian Taxation Office;
(e)did not know that the trustee had sent her further income questionnaires; and
(f)needed to use her passport as photo identification when making a statutory declaration.
On 2 February 2018, the Respondent requested further information from the trustee including:
(a)Why correspondence had been sent to the Applicant to different addresses after 11 August 2014 which was the date at which the Applicant notified the trustee of her address;
(b)whether the trustee had received information requested by the correspondence referred to in his Notice of Objection;
(c)details of any additional income information that the trustee requires from the Applicant which she has failed to disclose;
(d)whether the Applicant has provided to the trustee an excuse for not providing the requested information or her passport;
(e)whether the trustee had considered the Applicant’s travel overseas and limited access to emails before deciding that she had failed to comply with his requests for information;
(f)whether the trustee continues to require the certificate of title;
(g)whether the trustee had advised the Applicant that he would make an objection to discharge; and
(h)All correspondence relied upon by the trustee as evidence for the grounds.
On 9 February 2018, in response to the letter from the Respondent, dated 2 February 2018, the trustee provided a summary of events and an explanation regarding any letters being sent to multiple addresses. He further stated that the Applicant had failed to complete income questionnaires. The trustee stated that the Applicant’s email, dated 6 July 2015, failed to provide supporting evidence of her claim that her income was zero. The trustee considered the Applicant’s claim that she received no income was not correct as it can be reasonably inferred that the Applicant was receiving income sufficient to fund her daily living expenses and travel expenses. The Trustee stated that although he had been able to apply for the issue of a new title to the Footscray property, the Applicant is still required to deliver the certificate of title to the property or advise the trustee of its whereabouts by obligation imposed by the Victorian Land Title’s Office.
APPLICATION
The Applicant makes a number of submissions which in summary are: [13]
(a)that the trustee does not have a right to the Footscray property;
(b)that the trustee repeatedly sent correspondence to an invalid email address and made people believe that she was not compliant with the trustee’s requirements;
(c)that the Applicant was unable to contact the trustee by email when she was overseas and she did not know that the trustee sent her an income questionnaire; and
(d)that the Applicant had provided sufficient evidence demonstrating that she had disclosed information in relation to her income and property to the trustee.
[13] The Applicant's submissions are referred to and summarised in the Respondent’s reasons, dated 6 March 2018: pages 7 to 9 (T-26 to T–28). That summary adequately and properly sets out the Applicant’s submissions in this application. The Respondent’s submissions essentially repeat the reasoning provided by the Respondent to the Applicant by letter, dated 6 March 2018.
As noted above, many of the matters raised by the Applicant are not directly relevant to the question of whether there appears to be evidence sufficient to justify a review.
The Applicant applies under s 149Q of the Act for a review of the decision of the Respondent to not review the notice of objection filed by the trustee. The question before the Tribunal arises by application of s 149K of the Act, which provides a discretion under s 149K(1) that the Respondent, being the Inspector-General, may decide to review a decision of the trustee to file a notice of objection – where required – for reasons that appear to the Inspector-General to be sufficient to justify review.
Section 149K(1) of the Act contains a broad discretion. The use of the word “may” provides an indication that the provision contains a discretion. The use of the word “appear” in the context of the formulation makes plain that it is a broad discretion as the decision of the trustee may be reviewed for reasons that “appear” to be sufficient to justify such a review. Accordingly, the slightest of evidence could support a view formed by the Inspector-General that there ought be a review.
In exercising the discretion under s 149K(1) of the Act, the decision-maker may have regard to the whole of the circumstances, in a manner similar to the exercise of discretion under s 149N of the Act, including circumstances in relation to the filing of the notice and any other relevant materials before the Tribunal.[14]
[14] The Tribunal in RE Woodman and Inspector-General in Bankruptcy [1996] AATA 115 at [23], stated that “one must have regard to the whole of the circumstances surrounding the filing of the notice in the light of the relevant material now before the Tribunal.” The Tribunal in RE Neffati and Inspector-General in Bankruptcy [2017] AATA 1108, cited that decision, noting that the amendments incorporating the “special grounds” followed the decision, but stating that certain parts of the analysis in that case remained relevant.
The role of the Tribunal under s 149K(1) of the Act is not to conduct the review itself but to consider whether there ought be a review: Neffati and Inspector-General in Bankruptcy [2017] AATA 1108 at [7] and Neffati and Inspector-General in Bankruptcy [2016] AATA 941. Even though the Tribunal in exercising the broad discretion under s 149K(1) of the Act it is not conducting a review per se, s 149N(1A)—which sets out circumstances in which an objection must not be cancelled under a review— is relevant to whether a reason would be sufficient to justify a review.
Section 149N(1A) of the Act is a provision that circumscribes the manner of exercise of review by the Inspector-General. That provision provides that an objection must not be cancelled if:
(a)the objection specifies at least one “special ground”[15]; and
(b)there is sufficient evidence to suppose the existence of at least one “special ground”; and
(c)the bankrupt fails to establish that the bankrupt had a reasonable excuse for the conduct or failure that constituted the special ground.
[15] For this purpose, “special ground” means a ground specified in paragraph 149D(1)(ab), (d), (da), (e), (f), (g), (h), (ha), (ia), (k) or (ma) of the Act.
Accordingly, the grounds of objection from discharge are taken into account not only because all of the relevant circumstances ought be taken into account but also because where s 149N(1A) of the Act is satisfied, a review by the Inspector-General would be inutile because the objection could not be cancelled.
Sections 149D(1)(d) and (e), which arise for consideration in this application, are “special grounds” for the purposes of s 149N(1A) of the Act. No review of the trustee’s objection could result in the cancellation of that objection in circumstances where the objection specifies at least one special ground, there is sufficient evidence to suppose the existence of that ground and where a bankrupt fails to establish that they had a reasonable excuse for their conduct: see Nguyen v Pattison (2005) 142 FCR 561.There would be no requirement to show that the notice of objection would advance the administration of the bankruptcy: see Re Pattison and Inspector-General in Bankruptcy [2007] AATA 1517 at [18] referring to the extrinsic material to the amendments.
The evidence before the Tribunal supports a finding that the grounds raised by the trustee in the objection to discharge are “special grounds.” Correspondence between the parties contains requests for information from the trustee to the Applicant and her failure to answer those requests. The letter from the trustee to the Applicant, dated 23 June 2017, sought information regarding income of the Applicant in the periods 3 July 2016 to 2 July 2017 and 3 July 2017 to 2 July 2018. The trustee’s letters commencing 23 July 2014, and the letter 23 June 2017, requested the Applicant to deliver the certificate of title of the Footscray property or its location, along with monies collected by her with respect to the security bond and rental payments of the Footscray property.
The Applicant has provided what she considers to be sufficient evidence of income which she claims is “zero.” She states that she has provided a statement of affairs, dated 23 January 2015, and an email, dated 6 July 2015 (in response to a request for her to fill out an income questionnaire for the period 3 July 2015 to 2 July 2016 and provide evidence of her your actual income for the period 3 July 2014 to 2 July 2015) in which she has told the trustee that her income is “zero.”
It is unnecessary to address the sufficiency of the Applicant’s prior provision of income information, as there is no evidence that the Applicant has responded to, or adequately responded to, the trustee’s written request for information regarding her income in the period 3 July 2016 to 2 July 2018. In relation to that request, the Applicant has not provided evidence of compliance in writing or in a manner that discloses the particulars of income or expected income.
The Applicant has failed when requested in writing by the trustee to provide written information about her income or expected income (as provided under s 149D(1)(d) of the Act) and failed to disclose any particulars of income or expected income as provided for under s 149D(1)(e) of the Act. As such, the ground or grounds of objection are “special grounds” as defined under s 149N(1A) of the Act.
The Applicant has also failed to provide any evidence that she had a reasonable excuse for her conduct or failure to provide the information concerning her income as requested by the trustee. Accordingly, the evidence suggests that if a review were conducted s 149N(1A) would apply such that the Respondent could not cancel the objection.
For the purposes of exercising the discretion contained in s 149K(1) of the Act, I find that there are no reasons that appear to be sufficient to justify a review of the decision of the trustee to file a notice of objection to discharge. The decision of the Respondent to not conduct a review is affirmed.
I certify that the preceding 64 (sixty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member R. Pintos-Lopez
[sgd]........................................................................
Associate
Dated: 17 July 2019
Date of hearing: 30 October 2018 Applicant: In person Advocate for the Respondent: Mr Joe Giacco Solicitors for the Respondent: Craddock Murray Neumann Lawyers
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