Pattison v McKinnon
[2010] FMCA 261
•15 April 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PATTISON v McKINNON & ANOR | [2010] FMCA 261 |
| BANKRUPTCY – Completion of Statement of Financial Affairs – warrant issued pursuant to s.78(1)(f) of the Bankruptcy Act 1966 (Cth). |
| Bankruptcy Act 1966 |
| Nilant v. Macchia (2000) 104 FCR 238 |
| Applicant: | PAUL ANTHONY PATTISON |
| First Respondent: | DONALD NEIL MCKINNON |
| Second Respondent: | JEANETTE BEVERLEY DAWN MCKINNON |
| File Number: | MLG 1527 of 2009 |
| Judgment of: | Hartnett FM |
| Hearing date: | 13 April 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 15 April 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Gronow |
| Solicitors for the Applicant: | Middletons |
ORDERS MADE 13 APRIL 2010
A warrant issue pursuant to section 78(1)(f) of the Bankruptcy Act 1966 (Cth) (“the Act”) and in the form of arrest warrant annexed to the application filed 27 November 2009 (as amended by inclusion of the word “fully”) for the arrest of each of the respondent bankrupts DONALD NEIL MCKINNON and JEANETTE BEVERLEY DAWN MCKINNON and their committal to such gaol as the Court appoints until this Court otherwise orders.
The execution of the warrants provided for in paragraph 1 of these orders be stayed until 10.00am on 27 April 2010.
An authenticated copy of this order be served on each of the respondent bankrupts by the applicant trustee forthwith by priority pre-paid post at their respective addresses for service and by email to [email protected].
The costs of this application including the costs of this day be payable from the joint estates of the respondent bankrupts with priority in accordance with section 109 of the Act.
If prior to 10:00am on 27 April 2010 the respondent bankrupts comply in full with paragraph 2 of the orders made 6 April 2010 then paragraph 1 of these orders is discharged.
Reserve liberty to apply.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1527 of 2009
| PAUL ANTHONY PATTISON |
Applicant
And
| DONALD NEIL MCKINNON |
First Respondent
| JEANETTE BEVERLEY DAWN MCKINNON |
Second Respondent
REASONS FOR JUDGMENT
By application filed 27 November 2009 the applicant sought orders as against the first and second named respondents. When the matter came before the Court on 6 April 2010 orders were made on that application as follows:
(1)The matter be adjourned to 13 April 2010 at 10.00am.
(2)By 4.00pm on 12 April 2010 the respondent bankrupts each file with the Official Receiver in Bankruptcy for the District of Victoria and serve on the trustee Mr Paul Anthony Pattison a properly completed Statement of Affairs in compliance with section 54 of the Bankruptcy Act 1966 (Cth) including without limitation completion of Part D liabilities, question 15 Superannuation and in the case of Donald Neil McKinnon, question 12 Employment.
(3)In the event either respondent fails to comply with Order 2 herein the respondent who has not complied appear personally at the Federal Magistrates Court of Australia on 13 April 2010 at 10.00am.
(4)The applicant’s costs of the application be payable from the Estate with priority in accordance with section 109 of the Bankruptcy Act 1966 (Cth).
AND THE COURT NOTES:
That the Court will this day forward a sealed copy of this Order to the respondents by ordinary prepaid mail to the addresses at:
a)Post Office Box 616 Stawell, Victoria 3380;
b)142 Monaghan Road Stawell, Victoria 3380.
The respondents did not appear on that day.
On 13 April 2010 the matter returned to Court. The respondents did not appear. The applicant sought and obtained leave to rely on an affidavit sworn by the applicant, a Registered Trustee in Bankruptcy. As at the date of swearing of that affidavit, the applicant had not been provided with a properly completed Statement of Affairs in compliance with section 54 of the Bankruptcy Act 1966 (Cth) (“the Act”) and in particular there had not been completion of PART D – YOUR LIABILITIES. Further, on 11 April 2010 the applicant received an email from the second respondent advising that neither she nor her husband, the first respondent intended to complete Part D of their respective Statement of Affairs. The stated reason for this in so far as it is relevant and as contained in that email was that:
“...as far as we are concerned we do not have any creditors secured or otherwise. if the Supreme Court chose to give Judgement on some debt the CBA alleged we still owed them then so be it.”
and later:
“We are signing these forms that we personally believe the information contained therein is correct and it is to the best of our knowledge.”
Accordingly, no secured or unsecured creditors were listed by either of the respondents in their Statement of Affairs. The existence of secured creditors is a factually established matter.
The applicant’s application filed 27 November 2009 and served on the respondents included an order sought for the issue of a warrant for the arrest of the respondent bankrupts and their committal to gaol. That application is made pursuant to subsection 78(1)(f) of the Act. The making of such an order is an exercise of the Court’s discretion and is a serious step. The affidavit filed 27 November 2009 sworn by the applicant in support of the application is relied upon, as providing to the Court the necessary evidentiary basis.
On 26 August 2005 this Court made a Sequestration Order against both the first and second named respondents. The applicant was appointed as Trustee in each of the first and second named respondent’s estates. The applicant’s affidavit sworn 26 November 2009 sets out and is evidence of the steps taken by the applicant, commencing on 20 September 2005 and continuing through to September 2009, to have both the first and second named respondents complete and return their Statement of Affairs to him and in accordance with section 54 of the Act. Further that affidavit puts before the Court evidence of the respondent bankrupts failure and refusal to comply with any of their obligations under the Act, including obligations to file Statements of Affairs pursuant to section 54 of the Act and to co-operate with their trustee and inform him about matters pertaining to their bankruptcies and bankrupt estates including providing income details pursuant to section 139U(1)(A) of the Act and as is submitted by the applicant’s Counsel.
The respondent bankrupts reside in Victoria. They have had ample opportunity to comply with the requests of the trustee in bankruptcy and with the requirements of the Act over a lengthy period of time. They have been afforded opportunity to attend these hearings. The applicant trustee has repeatedly informed the respondent bankrupts of their obligations under the Act and sought their compliance on numerous occasions but to no avail. The Court is satisfied that without enforcing compliance in some other way not yet imposed, the respondent bankrupts will continue to fail and refuse to comply with an earlier order of the Court and with the totality of their obligations under the Act. The Court was informed by Counsel at the hearing of this matter that the respondent bankrupts have now filed incomplete Statements of Affairs with the Insolvency Trustee Service of Australia.
In the exercise of its discretion the Court has determined upon the issue of a warrant for the arrest and committal to gaol of the respondent bankrupts. There will be a stay on the execution of the warrants to give the respondent bankrupts one further chance to comply with their obligations under the Act and orders of this Court. As a matter of public policy it is important that the mandatory provisions of section 54 of the Act are complied with. Failure to file a Statement of Affairs within the requisite time is an offence for which a penalty is prescribed. As was said in Nilant v. Macchia (2000) 104 FCR 238 by Hill J (at 245):
The policy behind s 54 is clear. The obligation to file a statement of affairs in a public register is intended to make information concerning the bankrupt’s affairs available to creditors and, for that matter, members of the public. The former may inspect without payment of a fee, the latter only on payment of a fee. But it is in the interests of the public in the encouragement of morality in trading that the financial situation of a bankrupt debtor be open to inspection. Because, ordinarily, the administration of the estate and ultimate distribution of dividends from the estate, will be dependent upon the trustee having full details of the trade dealings and debts of a debtor, the statement is to be made available as well to the trustee in bankruptcy.
The respondent bankrupts need to complete Part D – YOUR LIABILITIES to enable the applicant trustee to perform his function. Further orders are made in these proceedings to compel compliance with this requirement.
I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Hartnett FM
Date: 15 April 2010
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