Official Receiver v Prince
[2006] FMCA 1917
•15 December 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OFFICIAL RECEIVER v PRINCE | [2006] FMCA 1917 |
| BANKRUPTCY – Application for payment of “after-acquired” property – insurance policies. |
| Bankruptcy Act 1966 (Cth), ss.5(1), 30(1), 58, 58(1)(b), 58(6), 116, 116(1)(a), 116(2)(b) and (2)(ca) Bankruptcy Regulations 1996 (Cth), regs.6.03 and 6.04 |
| McQuarrie v Jaques (1954) 92 CLR 262 |
| Applicant: | OFFICIAL RECEIVER |
| Respondent: | KIMBERLEY JANE PRINCE |
| File Number: | PEG 279 of 2006 |
| Judgment of: | Lucev FM |
| Hearing date: | 15 December 2006 |
| Date of Last Submission: | 15 December 2006 |
| Delivered at: | Perth |
| Delivered on: | 15 December 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr A F Carles |
| Solicitors for the Applicant: | Carles Solicitors |
| Respondent: | No Appearance |
ORDERS
The Respondent pay to the Applicant the sum of $26,200.00 representing a portion of the proceeds received by the Applicant on 22 October 2004 pursuant to the contents insurance policy held by the Respondent in respect of the property at 47 Driffield Street, Queenstown, Tasmania.
The Respondent pay to the Applicant the sum of $19,500.00 representing the net proceeds received by the Respondent on
25 November 2004 pursuant to the building insurance policy held by the Respondent in respect of the property at 47 Driffield Street, Queenstown, Tasmania.
The Respondent pay to the Applicant interest on the sum of $26,200.00 from 22 October 2004 and on the sum of $19,500.00 from
25 November 2004 until payment or judgment at the rate of 6% per annum.
The Respondent pay the Applicant’s costs of the action fixed in the sum of $1755.00 plus GST.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 279 of 2006
| OFFICIAL RECEIVER |
Applicant
And
| KIMBERLEY JANE PRINCE |
Respondent
REASONS FOR JUDGMENT
Background
This is an Application by the Official Receiver for and on behalf of the Official Trustee in Bankruptcy (“the Applicant”) seeking orders for the Respondent, Kimberley Jane Prince, to pay to the Applicant under s.30 of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) the following:
a)the sum of $26,200.00 representing a portion of the proceeds received by the Respondent on 22 October 2004 pursuant to the contents insurance policy; and
b)the sum of $19,500.00 representing the net proceeds received by the Respondent on 25 November 2004 pursuant to the building insurance policy.
Evidence before the Court
The following affidavits are relied upon by the Applicant:
a)Jacqueline Riley sworn 26 October 2006;
b)Andrew Charles Hunt, (Affidavit of Service) sworn 7 December 2006; and
c)Christopher Michael Donoghue sworn 13 December 2006.
The Respondent became bankrupt on 23 May 2003.
Relevant legislation
Section 30(1) of the Bankruptcy Act is in wide terms and gives the Court power to make the orders sought.
Pursuant to s.58(1)(b) of the Bankruptcy Act, “after-acquired” property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee. “After –acquired property” is defined in section 58(6) of the Bankruptcy Act as:
...in relation to a bankrupt, means property that is acquired by, or devolves on, the bankrupt on or after the date of bankruptcy, being property that is divisible amongst the creditors of the bankrupt.
“The property of the bankrupt” is defined under s.5(1) of the Bankruptcy Act as the property divisible among the bankrupt’s creditors and any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt.
Property which is divisible among the creditors is specified in s.116(1) of the Bankruptcy Act and subparagraph (1)(a) includes all property acquired by or devolving on the bankrupt after the date of bankruptcy but before the discharge.
The Respondent’s interest in the money paid out by the insurance company under the contents and building insurance policies held by the Respondent arose during the period the Respondent was an undischarged bankrupt and is captured by s.116(1)(a) as divisible property.
Insurance policies
Upon the destruction of the house on the Property by fire the Respondent had a right to claim against those insurance policies and subsequently receive any proceeds as deemed appropriate by Allianz under those insurance policies. However, as she was an undischarged bankrupt at the time the right to make claim against the insurance policies and to receive the proceeds vested in the Official Trustee, except to the extent that the proceeds represented non-divisible property.
Section 116(2) of the Bankruptcy Act places limitations on divisible property. Included in these limitations is subparagraph (2)(b) which provides that s.116(1) does not extend to the bankrupt’s household property that is of a kind prescribed (in regulation 6.03 of the Bankruptcy Regulations 1996 (Cth)) (“Bankruptcy Regulations”).
In relation to the contents policy proceeds, the Respondent has supplied evidence showing household property purchased in the amount of $18,540.00 with those funds. The Applicant is making no claim in respect of this amount as the new items remain non-divisible by virtue of s.116(2)(b) and regulation 6.03.
Further, in regard to the contents policy proceeds, the Respondent purchased with those funds a motor vehicle. The motor vehicle was purchased for the benefit of and in the name of the Respondent’s mother for the purchase price of $26,200. This purchase is not captured by s.116(2) as it does not fall into the category of property used by the bankrupt primarily as a means of transport as described under subparagraph (2)(ca) (which is in any event limited to $6,150.00 under regulation 6.04(4) of the Bankruptcy Regulations).
The Applicant is claiming in relation to the contents policy the amount of $26,200.00.
The Applicant is not making a claim in relation to the unaccounted for balance of the proceeds from the contents policy being a balance of $19,160.00.
In relation to the building policy the Applicant is claiming the amount of $19,500.00 which is the balance remaining after the deduction of the vendor finance in the amount of $43,500.00 from the building policy proceeds.
The Applicant’s total claim against the Respondent from the proceeds of the building and contents policies is $45,700.00.
Where a party receives proceeds of property which has vested in the Bankruptcy Trustee the Trustee is entitled to recover the proceeds from that property as money had and received: McQuarrie v Jaques (1954) 92 CLR 262 at 307 per Kitto J.
Respondent’s lack of action
The Respondent has not made any attempt to repay the monies to the Applicant nor has she made any attempt to oppose the Application.
The Respondent has not raised a defence nor filed a Notice of Opposition or affidavits in relation to this matter.
Orders
The following orders are made:
a)The Respondent pay to the Applicant the sum of $26,200.00 representing a portion of the proceeds received by the Applicant on 22 October 2004 pursuant to the contents insurance policy held by the Respondent in respect of the property at 47 Driffield Street, Queenstown, Tasmania.
b)
The Respondent pay to the Applicant the sum of $19,500.00 representing the net proceeds received by the Respondent on
25 November 2004 pursuant to the building insurance policy held by the Respondent in respect of the property at 47 Driffield Street, Queenstown, Tasmania.
c)The Respondent pay to the Applicant interest on the sum of $26,200.00 from 22 October 2004 and on the sum of $19,500.00 from 25 November 2004 until payment or judgment at the rate of 6% per annum.
d)The Respondent pay the Applicant’s costs of the action fixed in the sum of $1755.00 plus GST.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Lucev FM
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