Pascoe v Maynes
[2015] FCCA 1065
•29 April 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PASCOE & ANOTHER v MAYNES & ANOR | [2015] FCCA 1065 |
| Catchwords: BANKRUPTCY – Application by Trustees in Bankruptcy to distribute dividends to creditors – s.146 Bankruptcy Act 1966. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.6A, 54, 109, 146 |
| Rees (Trustee) Re Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862 |
| Applicants: | SCOTT DARREN PASCOE & ANDREW JOHN SCOTT |
| Respondents: | LINDSAY ARTHUR MAYNES & SUSAN LINDA MAYNES |
| File Number: | SYG 3138 of 2014 |
| Judgment of: | Judge Barnes |
| Hearing date: | 11 February 2015 |
| Delivered at: | Sydney |
| Delivered on: | 29 April 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Baird |
| Solicitors for the Applicant: | Sally Nash & Co |
| Respondent: | No appearance |
ORDERS
Pursuant to s.146 of the Bankruptcy Act 1966 (Cth) as amended (the Act) the distribution of dividends amongst the creditors who have proved their debts in the bankrupt estates of Lindsay Arthur Maynes and Susan Linda Maynes respectively proceed in accordance with Division 5 of Part VI of the Act as if the bankrupts had each filed a Statement of Affairs and those creditors had been stated to be creditors in it or them respectively.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3138 of 2014
| SCOTT DARREN PASCOE & ANDREW JOHN SCOTT |
Applicant
And
| LINDSAY ARTHUR MAYNES & SUSAN LINDA MAYNES |
Respondent
REASONS FOR JUDGMENT
On 11 February 2015, in the course of a hearing in which a number of matters were raised, I made an order pursuant to s.146 of the Bankruptcy Act 1966 (Cth) (the Act) that the distribution of dividends amongst creditors who had proved their debts in the bankrupt estates of Lindsay Arthur Maynes and Susan Linda Maynes proceed in accordance with Division 5 of Part VI of the Act as if the bankrupts had each filed a Statement of Affairs and those creditors had been stated to be creditors in it or them respectively. I indicated that I would provide reasons for my order. These are those reasons.
I proceeded on this basis in circumstances where at the hearing on 11 February 2015 it became apparent that the issue of whether an order should be made under s.146 of the Act was a discrete matter. However the issues raised in relation to other directions and orders sought by the Applicants (the Trustees in Bankruptcy of the bankrupt estates of Mr and Mrs Maynes) were such that it was appropriate to adjourn the hearing until a later date. I indicated at that stage that I intended to publish reasons for the order under s.146 at the same time as I gave reasons in relation to the other matters raised by the Applicants. Subsequently the Applicants discontinued the other aspects of their proceedings. In these circumstances this judgment relates only to the order made under s.146 of the Act.
As indicated, the Applicants are Trustees of the bankrupt estates of Mr and Mrs Maynes who were each made bankrupt on 1 November 2012. The Trustees filed the application on 12 November 2014 and relied on affidavit of Andrew John Scott sworn on 11 November 2014.
Mr and Mrs Maynes were present in Court on 11 February 2015 but indicated that they wished only to be present as observers and did not wish to be heard.
Section 146 of the Act 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.
Mr Scott’s evidence, which I accept, is that during the course of the administration of the bankruptcies he requested that each of the bankrupts to complete and file a Statement of Affairs with the Official Receiver and provide a copy to the Trustees. Each bankrupt was notified on a number of occasions of the obligation to complete and file a Statement of Affairs. Neither Mr or Mrs Maynes did so. Mr Scott attested to the fact that he was aware that AFSA had initiated prosecutions of the bankrupts for refusal or failure to complete Statements of Affairs, although the matters were withdrawn in mid-2014.
In these circumstances, in 2014 the Trustees sought public examinations of each bankrupt to determine their creditors (other than the petitioning creditor). On 6 August 2014 a solicitor acting for the Trustees appeared before a Registrar of this Court for the purpose of conducting the examinations. There was no appearance by either bankrupt. The public examination was adjourned until 18 August 2014.
On 18 August 2014 Counsel appeared for the Trustees. Each bankrupt appeared, but neither was prepared to recognise the jurisdiction of the Court. The matter was referred to Judge Driver, who gave directions to the bankrupts to attend before the Court to resume their public examination at which time they were each to agree to enter the witness box and take an oath or affirmation and answer questions. The Court ordered that in default of compliance with its direction a warrant should issue for the arrest of each of Mr and Mrs Maynes to answer to a charge of contempt.
The examination summons was adjourned until 29 October 2014. On that date the Trustees sought to examine Mr and Mrs Maynes, each of whom provided a document as to their non-recognition of this Court and their bankruptcies.
The matter was stood down. Each bankrupt was provided with a blank copy of a Statement of Affairs form to be completed. The bankrupts were directed to attend AFSA and lodge their Statement of Affairs with the Official Receiver.
In evidence are copies of two Statements of Affairs forms. None of the required information is provided on either form. The only information provided on the first Statement of Affairs form was a handwritten statement on the first page:
Refer declaration of peace under the covenant of grace and redemption
Refer to file number N.S.W6666/12/10
All assets reverted to Commonwealth of Australia
These statements were repeated on a separate page headed “Additional Notes”. No other part of the Statement of Affairs form was completed. The declaration as to the correctness of the particulars set out in the statement was not completed. On the last page the following words were inserted:
General execator (sic) of the Lindsay-Arthur Estate.
A signature in the name Lindsay-Arthur
followed by the words All rights reserved.
Similarly, the other Statement of Affairs form contained the same handwritten references to the so-called “declaration of peace” and asserted that all assets reverted to the Commonwealth of Australia. No other information was provided and the declaration was not completed. The following words were inserted on the last page:
General executor of the Susan-Linda estate.
A signature in the name of Susan-Linda
followed by the words All rights reserved.
According to Mr Scott, the Official Receiver rejected each of these Statements of Affairs.
On 29 October 2014 each of the bankrupts refused to enter the witness box and take an oath or affirmation for the purposes of the examination. However they agreed to answer questions from the body of the Court. A transcript of the public examination on 29 October 2014 is in evidence before the Court.
It is apparent from the transcript that the Registrar had adjourned the hearing to give Mr and Mrs Maynes the opportunity to complete and lodge Statements of Affairs. It is also apparent from what Mr and Mrs Maynes stated, that they did not recognise the operation of the Bankruptcy Act. They did not provide details of any creditors other than the petitioning creditor. They indicated informally that there was no other person from whom they had borrowed money.
Section 54(1) of the Act requires that:
(1) Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he or she is notified of the bankruptcy:
(a) make out and file with the Official Receiver a statement of his or her affairs; and
(b) furnish a copy of the statement to the trustee.
Under s.54(2), where a sequestration order is made against two or more joint debtors, each of those persons is under an obligation to make out and file a statement of the joint affairs of those persons.
Relevantly, s.6A of the Act provides that, for the purposes of s.54, a reference to a Statement of Affairs is a reference to a statement that:
(a) is in an approved form; and
(b) includes a statement identifying any creditor who is a related entity of the debtor of bankrupt; and
(c) contains a declaration that, so far as the debtor or bankrupt is aware, the particulars set out in the statement are correct.
In this case, neither of the documents purporting to be Statements of Affairs includes a statement identifying the debtor, the details required or any creditor. Nor does either Statement of Affairs contain a completed declaration that, so far as the bankrupt is aware, the particulars set out in the statement are correct. These forms do not satisfy s.6A of the Act and are not Statements of Affairs for the purposes of s.54 of the Act. It cannot be said that either bankrupt made out such a statement. While there is evidence of some attempt to lodge the incomplete forms with AFSA, they were rejected. Hence no Statements of Affairs has been filed by either bankrupt.
The prerequisite to the application of s.146 of the Act, that each of the bankrupts has failed to file a statement of his or her affairs, is satisfied. The Trustees have put considerable evidence before the Court in relation to the unsuccessful attempts made to obtain statements of affairs since the sequestration orders were made on 1 November 2012, in letters sent to the bankrupts and in the course of the public examination.
The bankrupts have not made any meaningful or real effort to complete Statements of Affairs. The limited notations inserted on the approved forms in circumstances where they were each aware of their bankruptcy and of their obligations under the Act indicates that their failure to complete and file proper Statements of Affairs in accordance with s.54 of the Act is deliberate. I am satisfied that the Court has jurisdiction to make the orders sought by the Trustees under s.146 of the Act.
Other than the petitioning creditor’s debt, the Trustees are aware of only one other creditor of the bankrupts. They have realised sufficient funds from sale of the bankrupts’ property to pay a dividend of 100 cents in the dollar to all approved creditors in each bankrupt’s estate. The evidence is that the administration of the estates is all but complete, save for the distribution of a dividend to creditors who have proved their debts in circumstances where the Trustees have funds to distribute in accordance with s.109 of the Act but are unable to finally administer the estates without the order sought being made.
I am satisfied that the failure by the bankrupts to file Statements of Affairs is causing prejudice to their creditors because the Trustees cannot distribute the moneys held by them (see Rees (Trustee) Re Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862).
In these circumstances I considered it appropriate to make the order sought pursuant to s.146 of the Bankruptcy Act as sought in the application.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Judge Barnes.
Associate:
Date: 29 April 2015
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