OFFICIAL RECEIVER v CLIFTON & ANOR
[2012] FMCA 988
•29 October 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OFFICIAL RECEIVER v CLIFTON & ANOR | [2012] FMCA 988 |
| BANKRUPTCY – Annulment and discharge of bankruptcy – where second bankruptcy on debtors petition – whether statement of affairs filed in relation to initial creditors petition or subsequent debtors petition. |
| Bankruptcy Act 1966, ss.33A, 54(1), 55(4A)(b), 149 Bankruptcy Regulations 1996 (Cth), regs.13.07(1),13.10 |
| Nilant v Macchia (1997) 148 ALR 329 Official Receiver v Seymour (2008) 7 ABC(NS) 14; [2008] FMCA 1614 |
| Applicant: | OFFICIAL RECEIVER |
| First Respondent: | TONI-ANN CLIFTON |
| Second Respondent: | FRANK LO PILATO |
| File Number: | PEG 224 of 2012 |
| Judgment of: | Lucev FM |
| Hearing date: | 29 October 2012 |
| Date of Last Submission: | 29 October 2012 |
| Delivered at: | Perth |
| Delivered on: | 29 October 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr A F Carles |
| Solicitors for the Applicant: | Carles Solicitors |
| For the Respondents: | No appearance |
THE COURT DECLARES THAT:
The First Respondent has complied with s.54 of the Bankruptcy Act 1966 (Cth) in relation to her bankruptcy by way of sequestration order on 23 March 2012 by filing her statement of affairs dated 21 March 2012 with the Official Receiver in Adelaide, South Australia on 29 March 2912.
THE COURT ORDERS THAT:
The bankruptcy of the First Respondent by way of Debtors Petition on 30 March 2012 be annulled pursuant to s.153B of the Bankruptcy Act 1966 (Cth).
The Court dispenses with compliance with Part 7 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) insofar as that Part requires the Applicant to give notice to creditors and requires the Trustee to prepare a report in relation to the bankruptcy.
The Applicant pay its own costs of this application.
The Applicant remove the entry of the debtors petition.
Reasons for Judgment to be published from Chambers at a later date.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 224 of 2012
| OFFICIAL RECEIVER |
Applicant
And
| TONI-ANN CLIFTON |
First Respondent
| FRANK LO PILATO |
Second Respondent
REASONS FOR JUDGMENT
Application
Before me today was an application by the Official Receiver for declarations and orders under ss.153B and 306 of the Bankruptcy Act 1966 (Cth)[1] for annulment and discharge of bankruptcy.
[1] “Bankruptcy Act”.
Orders made
Earlier today the Court made orders in the following terms:
1.That the bankruptcy of the First Respondent by way of Debtors Petition on 30 March 2012 be annulled pursuant to s.153B of the Bankruptcy Act 1966 (Cth).
2.That the First Respondent has complied with s.54 of the Bankruptcy Act 1966 (Cth) in relation to her bankruptcy by way of sequestration order on 23 March 2012 by filing her statement of affairs dated 21 March 2012 with the Official Receiver in Adelaide, South Australia on 29 March 2912.
3.The Court dispenses with compliance with Part 7 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) insofar as that Part requires the Applicant to give notice to creditors and requires the Trustee to prepare a report in relation to the bankruptcy.
4.The Applicant pay its own costs of this application.
5.The Applicant remove the entry of the debtors petition.
6.Reasons for Judgment to be published from Chambers at a later date.
and indicated Reasons for Judgment would be published at a later date. These are those Reasons for Judgment.
Evidence
The Official Receiver has filed two affidavits, one of Paul Eric, sworn 20 September 2012,[2] and one of Margaret Mary Woolford, sworn 17 October 2012.[3] The affidavits were taken as read for the purposes of the proceedings.
[2] “Eric Affidavit”.
[3] “Woolford Affidavit”.
Factual background
The relevant factual background is as follows:
a)the first respondent[4] completed a debtors petition[5] and statement of affairs[6] both dated 21 March 2012;[7]
b)a sequestration order was made against the Bankrupt on 23 March 2012, and the second respondent was appointed as trustee[8] of that bankrupt estate on that date;[9]
c)the Debtors Petition and Statement of Affairs were received through the post by the Office of the Official Receiver in Adelaide on 29 March 2012 and accepted by the Official Receiver on 30 March 2012.[10] These documents were posted to Adelaide as debtors wishing to present a debtors petition by post are now required to send the debtors petition and statement of affairs forms to the Office of Insolvency and Trustee Services Australia[11] in Adelaide;[12]
d)the Official Receiver acknowledges that acceptance of the Debtors Petition by the Official Receiver on 30 March 2012 was an administrative error, given that the Bankrupt had already been made bankrupt by sequestration order one week earlier;[13] and
e)the Bankrupt has confirmed that her financial position remained unchanged as from 21 March 2012 to 29 March 2012.[14]
[4] “the Bankrupt”.
[5] “Debtors Petition”.
[6] “Statement of Affairs”.
[7] Eric Affidavit, paras.5 and 6.
[8] “Trustee”.
[9] Eric Affidavit, para.7 (“Creditors Petition Bankruptcy”).
[10] Eric Affidavit, para.6.
[11] “ITSA”.
[12] Eric Affidavit, para.4.
[13] Eric Affidavit, para.15.
[14] Eric Affidavit, para.14.
Copies of the court application and the Eric Affidavit have been served by post on the Bankrupt and Trustee, and both have confirmed that they either consent to or do not oppose the orders sought in the application.[15]
[15] Woolford Affidavit.
Annulment
The circumstances of this case are similar to those in Official Receiver v Seymour[16] in which the Official Receiver’s office did not detect that Mr Seymour was already bankrupt by way of a sequestration order when it accepted his debtors petition.
[16] (2008) 7 ABC(NS) 14; [2008] FMCA 1614 (“Seymour”).
It is the Debtors Petition bankruptcy which should be annulled as that petition ought not to have been accepted by the Official Receiver. It would be difficult to argue that the sequestration order ought not to have been made as the Court making the sequestration order on 23 March 2012 could not have known that the Debtors Petition and Statement of Affairs had been completed by the Bankrupt, dated 21 March 2012, and had either been posted or was about to be posted. Even if the Debtors Petition and accompanying Statement of Affairs had been received by the Official Receiver prior to a sequestration order being made, the Bankrupt did not become bankrupt by way of the Debtors Petition until 30 March 2012 when the Official Receiver accepted the Debtors Petition.[17] Accordingly, it is the Debtors Petition bankruptcy rather than the Creditors Petition Bankruptcy which should be annulled.
[17] Bankruptcy Act, s.55(4A)(b).
Statement of affairs
The issue of the filing of the Statement of Affairs then needs to be considered. As noted in Seymour,[18] the Statement of Affairs is important as s.149 of the Bankruptcy Act provides that a bankrupt is discharged from bankruptcy at the end of three years from the date on which the Statement of Affairs is filed.
[18] ABC(NS) at 18-19 per Lucev FM; FMCA at para.13 per Lucev FM.
The National Personal Insolvency Index search relating to the Creditors Petition Bankruptcy[19] shows that the Statement of Affairs was filed on 29 March 2012. This can arguably be taken as evidence of the filing of the Statement of Affairs on that date by virtue of regs.13.07(1) and 13.10 of the Bankruptcy Regulations 1996 (Cth). The Bankrupt’s apparent intention, however, in filing the Statement of Affairs, with the Debtors Petition, is perhaps “evidence to the contrary” for the purpose of those regulations.
[19] Eric Affidavit, Annexure D.
When Seymour was decided in 2008, s.54(1) of the Bankruptcy Act required a Statement of Affairs to be filed with the Official Receiver for the District in which the sequestration order was made. Section 54(1) of the Bankruptcy Act was amended to omit the reference to “the District in which the sequestration order was made”.[20]
[20] Bankruptcy Act, s.54(1), Sch.3, Item 11. A statement of affairs can now be filed with any office of the Official Receiver.
In Seymour[21] the Court referred to the Bankrupt’s intention in filing his statement of affairs and on the facts of that case found that Mr Seymour had filed his statement of affairs in relation to the creditors petition (first bankruptcy) and not the debtors petition (second bankruptcy). In the present case the Bankrupt appears to have intended to file her Statement of Affairs with the Debtors Petition. In the present case the Statement of Affairs filed by the Bankrupt has, however, been entered on the National Personal Insolvency Index as relating to the Creditors Petition Bankruptcy as well as to the Debtors Petition bankruptcy.[22]
[21] ABC(NS) at 19 per Lucev FM; FMCA at para.15 per Lucev FM.
[22] Eric Affidavit, para.9.
The Statement of Affairs filed by the Bankrupt has been accepted by the Official Receiver as relating to the Creditors Petition and has been treated as such by the Trustee.[23]
[23] Eric Affidavit, para.11 and page 63 being the first page of trustee’s report to creditors.
In Nilant v Macchia[24] the Full Court of the Federal Court held that a statement of affairs presented by the debtor with his own debtors petition on 4 September 1991 (which was not accepted and on which he did not become bankrupt) filed two weeks prior to a sequestration order being made on 16 September 1991 was not sufficient compliance with s.54(1) of the Bankruptcy Act. The Court said that s.54(1) “takes effect prospectively and imposes an obligation upon a bankrupt to act within 14 days of the obligation arising”.[25]
[24] (1997) 148 ALR 329 (“Macchia”).
[25] Macchia at 333 per Spender, Carr and Finn JJ.
In the present case the Statement of Affairs was dated 21 March 2012 and was presumably completed and signed on that date. The sequestration order was made two days later on 23 March 2012. The Statement of Affairs was then filed with the Official Receiver on 29 March 2012 when it was received in the Official Receiver’s office in Adelaide. The question is then whether the Bankrupt has filed the Statement of Affairs in compliance with s.54(1) of the Bankruptcy Act as applied by the Full Court in Macchia above.
The facts are distinguishable from Macchia in that:
a)the Bankrupt did not file the Statement of Affairs until after the sequestration order had been made; and
b)in Macchia the debtors petition statement of affairs was never “filed” (there was only an attempted filing) as the debtors petition was not accepted by the Registrar (who at that time had the function of accepting debtors petitions prior to that function being transferred to the Official Receiver), but was referred by the Registrar to the Court. By contrast, in the present case, the Bankrupt’s Statement of Affairs was filed under both the Debtors Petition bankruptcy and the Creditors Petition Bankruptcy.
The signing and dating of the Statement of Affairs only two days before the sequestration order was made, and the filing after the sequestration order was made, taken together with the evidence that there was no change in the Bankrupt’s position in that two day period, can, in all the circumstances, be considered sufficient compliance with s.54(1) of the Bankruptcy Act.
Conclusion and orders
For the above reasons the Court made declarations and orders as set out in para.2 above.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 29 October 2012
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