FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NGUYEN v PATTISON | [2004] FMCA 517 |
| BANKRUPTCY – Discharge – objection by trustee to discharge bankrupt – refusal of trustee to withdraw objection – relevant considerations in determining whether objection to discharge should be withdrawn. |
Bankruptcy Act1966 (Cth), ss.149a, 149j, 149k, 149n, 178
Ansett, Re [1995] FCA unrep7408
Inspector-General in Bankruptcy v Nelson (1998) 168 ALR 340
Plant and Insolvency and Trustee Service Australia [2004] AATA 407
Thomas; Thomas v Donnelly (No. 2) [1997] FCA 1142
| Applicant: | THAN SON NGUYEN |
| Respondent: | PAUL A PATTISON Trustee of Bankrupt Estate of THAN SON NGUYEN |
| File No: | MZ 696 of 2004 |
| Delivered on: | 20 August 2004 |
| Delivered at: | Melbourne |
| Hearing date: | 16 August 2004 |
| Judgment of: | Riethmuller FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Irlicht |
| Solicitors for the Applicant: | Irlicht & Broberg |
| Counsel for the Respondent: | Mr Agardy |
| Solicitors for the Respondent: | Harwood Andrews |
ORDERS
The application be dismissed
The respondent pay the applicant’s costs thrown away, fixed in the sum of $300.00 and that otherwise there be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 696 of 2004
| THAN SON NGUYEN |
Applicant
And
| PAUL A PATTISON Trustee of Bankrupt Estate of THAN SON NGUYEN |
Respondent
REASONS FOR JUDGMENT
The applicant seeks a review of the decision of the Trustee of Bankruptcy (“the trustee”) pursuant to section 178 of the Bankruptcy Act. Section 178 of the Bankruptcy Act is in the following terms:
(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.
The decision that the applicant seeks to review is a decision of the trustee contained in a letter dated 20 May 2004. That decision is a decision of the trustee not to withdraw his earlier objection to the applicant’s discharge from bankruptcy, a course that is open to the trustee pursuant to section 149j of the Bankruptcy Act.
Background
In order to understand the nature of the dispute between the parties in this application it is necessary to provide a brief outline of the factual background.
The applicant became bankrupt on 25 July 2000. The applicant filed a statement of affairs on 17 October 2000, which thereby becomes the date of the commencement of his bankruptcy.
On 15 March 2001 the trustee received from the applicant a completed statement of annual income, and based upon that statement issued a contribution assessment notice for $4,595.00. A copy of that assessment was attached to the affidavit of the trustee as exhibit PP4. That notice was issued on 10 April 2001 and required the…
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- AGLC
- Nguyen v Pattison [2004] FMCA 517
- Case
- [2004] FMCA 517
- Decision Date
CaseChat Overview and Summary
The legal issues before the court encompassed the factors relevant to determining whether the trustee's objection to the bankrupt's discharge was justified. These factors included the utility of continuing the administration of the estate, the sufficiency of time for the trustee to make appropriate inquiries, the importance of maintaining public confidence in the bankruptcy system, and the interests of the bankrupt. Additionally, the court had to consider whether it had the authority to make orders that would effectively discharge the bankrupt but stay the operation of those orders to allow for further investigation by the trustee.
In its reasoning, the court examined the evidence and arguments presented by both parties. It found that there was insufficient evidence to conclude that continuing the administration of the estate was necessary, and that the trustee had had ample time to conduct further inquiries. The court also considered the impact on public confidence and the applicant's strong interest in being discharged from bankruptcy. Ultimately, the court determined that it did not have the authority to make conditional orders that would allow the trustee to withdraw the objection but delay the discharge. However, the court concluded that the trustee should actively pursue the administration of the estate and exercise his discretion to withdraw the objection if he failed to do so within a reasonable timeframe. The court dismissed the application and ordered the trustee to pay the applicant's costs associated with the proceedings, excluding costs thrown away due to an earlier adjournment.
Orders
Orders of the court
1.
The application be dismissed
2.
The respondent pay the applicant’s costs thrown away, fixed in the sum of $300.00 and that otherwise there be no order as to costs.
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
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
If one analyses this case in terms of the factors identified above the results are as follows:a)The utility of continuing the administration: There appears to be prima facie evidence that the applicant has a greater income and earning capacity than presently being exercised. It is not possible to determine definitively if there is in fact utility in continuing the administration of the estate;b)Sufficient time to allow for appropriate inquiry: Whilst the trustee has had significant time to make enquires, there is now evidence which would warrant further inquiry; at least another few months would be needed in this regard. It is difficult to see why a trustee should have more than 9 to 12 months after a bankrupt has complied, if the trustee is not actively pursuing the administration of the estate;c)Maintaining public confidence: There has been a significant period of bankruptcy, in excess of the minimum 3 years. The applicant has suffered a significant lengthening of his period of bankruptcy due to his default. The lack of interest in the applicant by the trustee to date would do little to maintain public confidence, although the fault in this regard lies with both applicant and trustee. However, to discharge the applicant without ensuring that a reasonable opportunity is provided to follow up the matters arising from the applicant’s section 81 examination would not be likely to maintain public confidence. d)The interests of the Bankrupt: The applicant has a strong interest in discharge from bankruptcy. He is entitled to expect that the trustee would act in a timely fashion if the trustee wishes to pursue him further. However, his failure to maintain any contact with the trustee has also contributed to the current circumstances. It was submitted by both parties that I could make orders requiring the trustee to withdraw the objection (and effectively discharge the applicant), but stay the operation of those orders until the end of the year to allow the trustee to pursue the applicant over the next few months. It was argued that the trustee could then apply to have my orders discharged if the trustee could establish further grounds for continuing the bankruptcy. That would really amount to a provisional or conditional judgment. I am not satisfied that I have power to make such orders, nor that it would be appropriate to do so in the context of this case. On balance I am not satisfied that it would be just and equitable to make orders under section 178 requiring the trustee to exercise his power to withdraw the objection under section 149J (effectively discharging the applicant from bankruptcy). However, the trustee ought to actively pursue the administration of this estate, and if he does not do so, it is difficult to see why he ought not exercise his discretion under section 149J in the near future. I therefore dismiss the application. I am of the view that whilst the applicant has failed in the application it is only on the basis of evidence elicited during the application, which could have been obtained by the trustee before the applicant was put to the costs of the proceedings. The initial reasons given by the trustee were such that it was reasonable for the applicant to bring the application. Therefore I do not propose to make any orders for the costs of the application, other than the costs thrown away by an earlier adjournment (agreed by the parties to be in the sum of $300.00 and payable by the respondent to the applicant).