Official Trustee in Bankruptcy as trustee of the Property of Cholkun Pak, a Bankrupt v Pak

[2015] FCCA 3115

FEDERAL CIRCUIT COURT OF AUSTRALIA

OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE PROPERTY OF CHOLKUN PAK, A BANKRUPT v PAK [2015] FCCA 3115

Catchwords:
BANKRUPTCY – Whether an order pursuant to s.146 of the Bankruptcy Act 1966 (Cth) should be made that the costs, charges and expenses of the administration of the bankruptcy of the respondent and a distribution of the dividends among creditors who prove their debts in the Estate of the bankrupt shall proceed in accordance with Part 6 Division 5 of the Bankruptcy Act 1966 (Cth).

Legislation:
Bankruptcy Act 1966 (Cth), ss.54, 140, 145, 146
Federal Circuit Court of Australia Act 1999 (Cth), s.102
Federal Court (Bankruptcy) Rules 2005, Schedule 2

Cases Cited:
Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968

Applicant: OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE PROPERTY OF CHOLKUN PAK, A BANKRUPT

Respondent: CHOLKUN PAK

File Number: SYG 2214 of 2015

Judgment of: Judge Emmett

Hearing date: 17 November 2015

Date of Last Submission: 17 November 2015

Delivered at: Sydney

Delivered on: 25 November 2015

REPRESENTATION

Solicitor for the Applicant: Ms Irina Hoskinson
(Craddock Murray Neumann Lawyers)

No appearance by or on behalf of the respondent.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2214 of 2015

IN THE MATTER OF: OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE PROPERTY OF CHOLKUN PAK, A BANKRUPT

OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE PROPERTY OF CHOLKUN PAK, A BANKRUPT

Applicant

And

CHOLKUN PAK

Respondent

REASONS FOR JUDGMENT

1. The applicant is the Trustee of the bankrupt estate of the respondent in respect of whom a Sequestration Order was made on 17 December 2008.

2. This is an application by the Trustee, filed on 10 August 2015, for an order pursuant to s.146 of the Bankruptcy Act 1966 (Cth) (“the Act”) that the costs, charges and expenses of the administration of the bankruptcy of the respondent and a distribution of the dividends among creditors who prove their debts in the estate of the bankrupt respondent. The Trustee seeks that the matter proceed in accordance with Pt.6, Div.5 of the Act, as if the respondent had filed a Statement of Affairs and those creditors had been stated to be creditors in it.

3. In the application, the Trustee also seeks an order that the respondent not be entitled to any surplus funds remaining after the payment of the costs, charges and expenses of the administration of the bankruptcy and after payment of the dividends to creditors, until such time as the respondent has lodged a duly completed Statement of Affairs in the required form with the Trustee, and the Trustee has dealt with the claims of any further creditors disclosed in the Statement of Affairs; and an order that costs of the application be paid from the bankrupt estate of the respondent.

4. On 16 September 2015, Registrar Tesoriero made Orders for substituted service upon the respondent.

5. The Trustee’s application does not fall within the powers that may be exercised by a Registrar of the Court (see s.102 of the Federal Circuit Court of Australia Act 1999 (Cth); Schedule 2 to the Federal Court (Bankruptcy) Rules 2005(Cth)).

6. On 3 November 2015, the matter came before me for directions.

7. There was no appearance by the respondent who has not participated in the proceeding at any stage.

8. On 3 November 2015, I made Orders requiring the Trustee to serve the respondent with a copy of the Trustee’s submissions and a copy of my Orders by 6 November 2015, in accordance with the Orders for substituted service made by Registrar Tesoriero on 16 September 2015. The Trustee was also directed to file an affidavit of service of the aforementioned documents in support of the orders sought in the application filed on 10 August 2015.

9. Order 3 of my Orders on 3 November 2015 stated that if the respondent failed to appear at the next scheduled court event, the matter may be heard in his absence and the orders sought in the application may be made.

10. The matter was then set down for hearing before me on 17 November 2015.

11. The respondent did not appear at the hearing on 17 November 2015, despite the matter being called on several occasions. There has been no communication received from the respondent, either by the Trustee or the Court, seeking an adjournment of today’s hearing or for any other reason.

12. In support of their application, the Trustee read the affidavit of service of Ashleigh Estwick-Jackson, sworn on 6 November 2015 and filed on that date, and the affidavit of service of Ross Williams, sworn on 5 November 2015 and filed on 10 November 2015. Both affidavits deposed to the service upon the respondent of copies of the Trustee’s submissions and the Orders made by me on 3 November 2015 in the in accordance with Registrar Tesoriero’s Orders for substituted service.

13. Accordingly, I am satisfied that the Order made by me on 3 November 2015 requiring service of the Orders made by me on 3 November 2015, together with submissions in support of the substantive application, have been complied with.

14. Upon the making of a Sequestration Order, s.54(1) of the Act requires a bankrupt to file a Statement of Affairs within 14 days from the date on which the bankrupt was notified of bankruptcy and to furnish a copy of that Statement of Affairs on the Trustee.

15. Where a bankrupt has failed to file a Statement of Affairs, s.146 of the Act provides that the Court may order the distribution of dividends amongst creditors who have proved their debts as if the bankrupt had filed a statement of his affairs and those creditors had been stated to be creditors in it.

16. The purpose of s.146 of the Act is well understood as giving the Court the means of ensuring that those with an interest in a bankrupt’s affairs are not prejudiced by an absence of a Statement of Affairs (see Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968).

17. In support of the application, the Trustee read the affidavit of Stephen Abraham, sworn 6 August 2015 and filed on 10 August 2015. The Trustee’s attempts to obtain a Statement of Affairs from the respondent are summarised in the Trustee’s submissions as follows:

    “14. On 26 February 2009, the Applicant caused a letter to be sent to the Respondent at Unit 4, 42 Thomas Drive, Chevron Island QLD 4217 requesting completion of his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](a).

    On 3 February 2014, the Applicant caused a letter to be sent to the Respondent at Unit 707, 30 - 34 Surf Parade, Broadbeach QLD 4218 requesting completion of his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](d).

    On 3 February 2014, the Applicant caused a letter to be sent to the Respondent at PO Box 213, Chevron Island, Queensland 4217 requesting completion of his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](e).

    On 4 February 2014, the Applicant caused an email to be sent to the Respondent requesting completion of his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](f).

    On 11 February 2014, the Applicant received an email from the Respondent indicating he would complete the Statement of Affairs and return same by the end of the week: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](g).

    On 10 April 2014, the Applicant received a telephone call from the Respondent. The Respondent was advised of his obligation to complete his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](/).

    On 19 May 2014, the Applicant caused a telephone call to be made to the Respondent. The Respondent was advised of his obligation to complete his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](q).

    21. On 19 May 2014, the Respondent confirmed his address to be 3/6 White Street, Southport, QLD 4215: Affidavit of Stephen Abraham sworn 6 August 2015 at [15].

    On 20 May 2014, the Applicant caused an email to be sent to the Respondent requesting completion of his statement of affairs: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](s).

    On 20 August 2014, the Applicant caused a letter to be sent to the Respondent at Unit 707, 30- 34 Surf Parade, Broadbeach QLD 4218 noting his failure to complete his statement of affairs. The letter further requested contact from the Respondent: Affidavit of Stephen Abraham sworn 6 August 2015 at [5](u).”

18. I accept the evidence of Mr. Abraham, who deposed to a summary of those attempts, and make findings in accordance with the facts deposed to above.

19. Further, in accordance with the affidavit of Mr. Abraham, I accept that the respondent has not filed a Statement of Affairs as required by s.54 of the Act. In accordance with Mr. Abraham’s affidavit, I accept that:

    a)the Trustee has made numerous attempts to obtain details of all creditors in the bankrupt estate;

    b)the only creditor of the bankrupt estate known to the Trustee who has made a claim is ‘AAI Limited’, in the amount of $98,246;

    c)the Trustee has given written notice of the intention to declare a dividend to anyone known to be a creditor, but who has not lodged a Proof of Debt in accordance with s.140(3) of the Act;

    d)on 15 November 2015, a Notice of Intention to Declare a Dividend was issued;

    e)on 6 February 2015, a further Notice of Intention to Declare a Dividend was issued; and,

    f)on 2 June 2015, an advertisement was published in ‘The Australian’ newspaper advising of the Trustee’s intention to declare a dividend.

20. I accept the Trustee’s submission that it is in the interests of the creditors that the Trustee distribute the funds from the bankrupt estate and I accept that between 25 March 2009 and 2 July 2015, multiple reports to creditors were issued.

21. The details of the only known assets of the bankrupt’s estate and the current amount available for distribution are summarised in the Trustee’s submissions as follows:

    “33. On 25 February 2009, the Applicant sent a letter to various financial institutions requesting details of accounts held by the Respondent: Affidavit of Stephen Abraham sworn 6 August 2015 at [11].

    Searches conducted by the Applicant confirmed the Respondent owned a property located Unit 707, 30-34 Surf Parade, Broadbeach QLD 4218 (the Broadbeach Property): Affidavit of Stephen Abraham sworn 6 August 2015 at [14].

    The National Australia Bank as secured creditor sold the Broadbeach Property: Affidavit of Stephen Abraham sworn 6 August 2015 at [16](m)

    On 5 February 2015, the Applicant received a cheque from the National Australia Bank in the amount of $59,029.47 being the balance of funds available to creditors after the sale of the Broadbeach Property: Affidavit of Stephen Abraham sworn 6 August 2015 at [16](n).

    The Applicant has taken a number of steps to ascertain and take control of all property forming part of the bankrupt estate: Affidavit of Stephen Abraham sworn 6 August 2015 at [16]-[17].

    The Applicant is not aware of any other property which forms part of the bankrupt estate of the Respondent or that is available for distribution to creditors of the Respondent.

    Current amounts available for distribution

    The Official Trustee currently has an amount of $59,029.47 available for distribution: Affidavit of Stephen Abraham sworn 6 August 2015 at [16](n).”

22. Section 140 of the Act provides:

    “(1) The trustee of the estate of a bankrupt shall, subject to this section, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts.

    (2) Subject to the retention of such sums as are necessary to meet the costs of administration or to give effect to the provisions of this Act, the trustee shall distribute as dividend all moneys in hand."

23. Section 145 of the Act provides:

    “(1) Subject to this section, when the trustee of the estate of a bankrupt has realized all the property of the bankrupt, or so much of it as can, in his or her opinion, be realized without needlessly protracting the trusteeship, he or she shall declare and distribute a final dividend."

24. I accept the Trustee’s submission that a principal object of the legislation is to ensure the distribution of dividends to creditors as soon as feasible.

25. Based on the evidence before me, I accept:

    a)that, save for the distribution of a dividend to creditors, the administration of the bankrupt estate of the respondent is otherwise complete;

    b)that the delay in declaring and distributing a dividend to the creditors of the respondent causes prejudice to creditors of the bankrupt estate;

    c)that the respondent has given numerous indications that the Statement of Affairs would be completed, yet has failed to file such a statement; and,

    d)that to compel the respondent to file a Statement of Affairs prior to distribution would only incur further cost and delay in the administration of the bankrupt’s affairs, continuing the prejudice to creditors of the bankrupt estate.

26. Accordingly, in the circumstances, I am satisfied that the orders sought by the Trustee should be made.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Emmett

Associate: 

Date:  25 November 2015