PALMER AS TRUSTEE OF THE REGULATED DEBTOR ESTATE OF LAZAR, IN THE MATTER OF LAZAR (BANKRUPT)
[2020] FCCA 2157
•7 August 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PALMER AS TRUSTEE OF THE REGULATED DEBTOR ESTATE OF LAZAR, IN THE MATTER OF LAZAR (BANKRUPT) | [2020] FCCA 2157 |
| Catchwords: BANKRUPTCY – Application for order under s.146 of the Bankruptcy Act 1966 (Cth) (Act) that the distribution of dividends proceed as if bankrupt had filed a statement of affairs as required by the Act – application granted. |
| Legislation: Bankruptcy Act 1966 (Cth), s.146 |
| Cases cited: Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968 |
| Applicant: | AN APPLICATION BY CHRISTOPHER PALMER IN HIS CAPACITY AS TRUSTEE OF THE REGULATED DEBTOR ESTATE OF JOHN Z LAZAR (IN THE MATTER OF JOHN Z LAZAR - A BANKRUPT) |
| File Number: | SYG 1656 of 2020 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 4 August 2020 |
| Date of Last Submission: | 4 August 2020 |
| Delivered at: | Sydney |
| Delivered on: | 7 August 2020 |
REPRESENTATION
| Solicitors for the Applicant: | Mr C Bavin of Hunt & Hunt Lawyers, by telephone |
ORDERS
Pursuant to s.146 of the Bankruptcy Act 1966 (Cth) (Act) the applicant, being the trustee of the bankrupt estate of John Z Lazar, distribute dividends among the creditors of John Z Lazar who have proved their debts in accordance with Div.5 of Pt.VI of the Act as if John Z Lazar had filed a statement of his affairs and those creditors have been stated to be creditors in it.
The costs of the application be paid out of the Regulated Debtor Estate of John Z Lazar.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1656 of 2020
| AN APPLICATION BY CHRISTOPHER PALMER IN HIS CAPACITY AS TRUSTEE OF THE REGULATED DEBTOR ESTATE OF JOHN Z LAZAR (IN THE MATTER OF JOHN Z LAZAR - A BANKRUPT) |
Applicant
REASONS FOR JUDGMENT
The trustee of the estate of John Z Lazar (Trustee) applies for an order under s.146 of the Bankruptcy Act 1966 (Cth) (Act) which provides:
Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.
The Trustee was appointed trustee in bankruptcy of the estate of John Z Lazar as a result of a sequestration order made on 3 March 2015. The application that is before me was filed on 9 July 2020, and came before me on 4 August 2020 on a first court date. There was no appearance by or on behalf of Mr Lazar; and I am satisfied notice of the first court date was given to him by email sent on 20 July 2020.[1]
[1] Affidavit of C Bavin 20.07.2020
I begin with the principles I should apply when considering this application, and these were stated by Gleeson J in Roufeil (Trustee), in the matter of Jarvie (Bankrupt).[2] In that case her Honour said there are two issues in relation to an application under s.146 of the Act that need to be determined: first, whether the bankrupt has failed to file a statement of affairs as required by the Act, and, second, assuming that the question is answered in the affirmative, whether the Court in the exercise of its discretion should order the distribution of dividends among the creditors that have proved their debts.
[2] [2015] FCA 232
I am satisfied on the evidence before me that Mr Lazar has not provided a statement of affairs, and he has failed to do so even though the Trustee has attempted to persuade Mr Lazar to do so.[3] That means that the precondition for the exercise of the discretion conferred by s.146 of the Act is satisfied.
[3] Affidavit of C Palmer 08.07.2020, [4]-[16]
Section 146 of the Act “is intended to facilitate the distribution of dividends among the creditors of the bankrupt in circumstances where the trustee has not had the benefit of a statement of affairs prepared by the bankrupt”.[4] The purpose of s.146 of the Act is “to give the Court the means of ensuring that the absence of a statement of affairs does not prejudice those with an interest in the bankrupt’s affairs”.[5] Relevant factors to the exercise of the discretion conferred by s.146 of the Act include whether the creditors have been notified of the application and have had the opportunity to be heard, and whether the trustee has taken steps to ascertain whether there are creditors other than those who have come to the trustee’s attention by filing a proof of debt.
[4] Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649, at [14]
[5] Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968, at [4]
In his affidavit of 8 July 2020 the Trustee sets out the steps he has taken to ascertain the identity of the creditors of Mr Lazar. The enquiries consisted of the Trustee sending letters to the major financial institutions operating in Australia; on 14 May 2020 placing an advertisement in each of the Australian newspaper and The Age newspaper; on 20 May 2020 issuing a circular to nine mercantile agents with whom the Trustee is familiar; communicating with the Australian Taxation Office; and communicating with Mr Lazar.[6] That resulted in the Trustee making an additional enquiry of a particular entity which, on enquiry of the entity’s mercantile agent, confirmed it was not a creditor of Mr Lazar.[7] The Trustee has listed all of the creditors of Mr Lazar,[8] and notice has been given of today’s application to each of the creditors.[9]
[6] Affidavit of C Palmer 08.07.2020, [17]-[26]
[7] Affidavit of C Palmer 31.07.2020, annexure “E”
[8] Affidavit of C Palmer 08.07.2020, [27]
[9] Affidavit of D Gray 22 July 2020
I am satisfied the Trustee has undertaken all reasonable steps to ascertain the identity of the creditors of Mr Lazar, and that the Trustee has given those creditors whom he has identified reasonable notice of his intention to apply for the orders the trustee seeks in this application. I propose, therefore, to make an order substantially to the effect of the orders claimed in the application.
I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 7 August 2020
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