Peldan v Troiani - [2004] FMCA 469

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PELDAN & ANOR v TROIANI & ANOR

[2004] FMCA 469

BANKRUPTCY – Failure of respondents to file a Statement of Affairs – whether failure was deliberate – consequences of failure to comply with section 54 of the Bankruptcy Act.

Stubberfield ex Parte John Robert Rees (unreported decision delivered
17 December 1999)
Sweeney v Skyring (unreported decision delivered by Spender J on 2 August 2000)

Applicants:

MICHAEL PELDAN & MORGAN LANE as TRUSTEES IN BANKRUPTCY OF SANTE TROIANI & RITA TROIANI

Respondents:

SANTE TROIANI & RITA TROIANI

File No:

BZ 176 OF 2004

Delivered on:

6 July 2004

Delivered at:

Brisbane

Hearing date:

6 July 2004

Judgment of:

Baumann FM

REPRESENTATION

Counsel for the Applicants:

Mr Perkins

Solicitors for the Applicants:

Mallesons Stephan Jaques

Respondents

Appeared on own behalf

ORDERS

Under section 146 of the Bankruptcy Act 1966, a distribution of a dividend be made to the creditors of the respondents who have proved their debts in accordance with division 5 of the Act, as if the respondents had filed a statement of affairs and those creditors had been stated to be creditors in it.
That the costs of and incidental to this application shall be costs in the bankrupt estates of the respondents.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BZ 176 of 2004

MICHEAEL PELDAN & MORGAN LANE
as Trustees in bankruptcy of Sante Troiani & Rita Troiani

Applicants

And

SANTE TROIANI & RITA TROIANI

Respondents

REASONS FOR JUDGMENT

(Settled from the ex tempore Reasons)

The application before me today is an application brought by the trustees of the bankrupt estates of Sante and Rita Troiani. The application is an application pursuant to section 146 of the Bankruptcy Act 1966, for an order permitting the trustee, upon such terms as the Court may order, to make –
"a distribution of the dividends to be made to the creditors of the respondents, who have proved their debts in accordance with division 5 of the Act, as if the respondents had filed a statement of affairs and those creditors had been stated to be creditors in it".
Section 146 of the Bankruptcy Act provides inter alia, that:
"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 the distribution of dividends amongst the creditors who have proved their debts. Such shall proceed in accordance with this division as if the bankrupt had filed the statement of his or her affairs and those creditors had been stated to be creditors in it."
It follows that the application is, therefore, premised on the fact that Mr and Mrs Troiani have failed to file a statement of affairs. The evidence from Mr Peldan, one of the trustees, confirms that to be the case and, in fact, as much is acknowledged by the respondents. Before dealing with the substantive application, there are three applications, which I had dealt with during the course of this afternoon's hearing.
The first application was an application that I disqualify myself. Mr and Mrs Troiani, who represented themselves, inquired as to whether I held an account with the National Australia Bank. I considered refusing to answer the question, but on the basis that they are unrepresented, I was happy to confirm that I did hold an account with the National Australia Bank, as I do with a number of other banks. The National Australia Bank, although not the only creditor, is the main creditor in the estate. Mrs Troiani says that I should disqualify myself as a result. I refuse the application. I do not regard the mere fact that I hold an account with the National Australia Bank as sufficient to create any apprehension of bias against me.
I also note that I have previously dealt with this matter on two occasions; previously, to deal with an application to set aside a bankruptcy notice, and then the actual creditor’s petition. To the best of my recollection, at no previous time, in which on at least one occasion the parties were represented by counsel, Mr Heyworth-Smith, was any application made against me of a similar nature.
The second matter, which was raised today, was, effectively, an application by the respondents for an adjournment based on two issues. Firstly, they say that a registrar of this Court, Deputy Registrar Baldwin, failed to allow them to file subpoena which were relevant to the issues. No formal application to review any registrar's decision, refusing to file the subpoenas, has been brought. It seems clear from what has been said to me by Mr and Mrs Troiani, that the subpoenas were directed to their continued quest for what they say is a full and complete accounting by the National Australia Bank, who were their secured creditor, of information, documents and records, which they say they have never been provided with. That being the nature of the subpoenas, it would seem to me that such subpoena are not germane or relevant to the issues which are before me in this application today.
They also say that they wish to have an adjournment because they have made an application for annulment. I place on the record that I stood down to allow the registry to inform me whether any application for annulment has been filed in this Court. I am informed by the District Registrar, Registrar Ramsey, that no such application has been filed. Mrs Troiani from the bar table says that the application was forwarded by registered post from the Bundaberg area, where they live, on 1 July. I cannot explain why it has not been received in Brisbane, but I rely upon the advice given to me by the District Registrar. In any event, it should be noted, as Mr Perkins, who is counsel for the applicants, submitted, that the application for annulment has come very much at the eleventh hour. The sequestration order against the respondents was made on 16 May 2003. There has been plenty of opportunity for the respondents to make an application for an annulment if they felt there was a basis for doing so. In fact, in part of the lengthy material filed in these proceedings by the respondents, they say that they engaged a solicitor to assist them to prepare an application for annulment, but that in some way, it was not completed by that solicitor properly.
I also note that at the time that the parties were sequestrated, they were represented by counsel, and the only basis upon which that counsel asserted that a creditors petition ought not be successful, was for “any other sufficient cause or reason”. The reasons in respect of that sequestration have already previously been published to the parties, and I will refer briefly to them shortly, as I must, because the background of this case is really the reason why, it seems to me, the respondents have found it difficult to deal with the issue.
Registrar Ramsey, by order made 5 May 2004, directed that the respondent should file a notice of opposition to the application made by the Trustee. The notice of opposition filed on 27 May 2004 states the following grounds:
“ Bank did not fulfil loan agreement. Payments made between 1993 to 1996 had been unaccounted for. Loan recommenced without default. No disclosure or document from National Australia Bank. Interest rates overcharge.”
In an affidavit by Mr Troiani, filed 27 May 2004, he provides information, including a report by Mr Tom Quinn as was offered to me at the hearing of the creditors petition on 16 May 2003.
In Mrs Troiani’s notice of opposition, which was also supported by an affidavit, in which she apologised for not submitting any statement of affairs because:
“I do not owe the bank the amount claimed …”
and claimed simply that she opposed the application made on the grounds that:
“ This bankruptcy should never have occurred.”
The history of the dispute between Mr and Mrs Troiani and the National Australia Bank was succinctly set out in my reasons delivered 16 May, and for completeness I repeat them here:
“ The respondents were defendants in an action brought by the bank to enforce (a) guarantee of the indebtedness of a company called Wide Bay Brickworks Proprietary Limited (the company). Mr Troiani was the managing director and major shareholder of the company; (b) where an action was commenced by the bank against the respondents and others under the guarantee, the matter came before the Chief Justice of Queensland upon application for summary judgment. The respondents were represented by Senior Counsel on the application and the Chief Justice delivered reasons on 22 March 2001, in which he concluded, pursuant to rule 292 of the Uniform Civil Procedure Rules Queensland, that the bank was entitled to summary judgment, "there being no defence and that there is no need for trial". He ordered the respondents to pay $5,333,452.24 in costs on an indemnity basis; (c) the respondents appealed the decision to the Court of Appeal, which delivered reasons on 6 June 2002. The majority (McPherson and Fryberg JJ, Helman J dissenting) allowed the appeal in part, essentially reducing the quantum of the judgment to $3,451,599.24; (d) the bank, relying on the judgment, issued bankruptcy notices. The respondents sought to set aside the notices. However, for the reasons delivered by me on 13 September 2002, the application to set aside was dismissed. The respondents failed to comply with the requirements of the notice and an act of bankruptcy was therefore committed; (e) the creditors' petition filed 27 September 2002 had been properly served, and whilst the petition is opposed by the respondents, the reasons for judgment of de Jersey CJ in the Court of Appeal were before me and had been considered and read by me.
Today, Mr and Mrs Troiani again continue to assert that this Court should review the liability they have to the National Australia Bank.

I have tried, on a number of occasions, to explain to them that that is not the role of this Court in these proceedings.
In the circumstances, I am required to consider the application made by the trustees, confronted as I am that it is plain beyond argument that this has been a deliberate choice on the part of Mr and Mrs Troiani to not file a statement of affairs. As Spender J observed in the matter of Stubberfield ex Parte John Robert Rees (unreported decision delivered 17 December 1999), and a latter decision referred to, which is in the same vein, by Mr Perkins of Sweeney v Skyring (unreported decision delivered by Spender J on 2 August 2000) the failure to file a Statement of Affairs is a failure to comply with section 54 of the Bankruptcy Act, and exposes the Respondent’s to consequences of that deliberate failure.
In this case there is no lawful excuse or any valid reason in the material before me which would justify or explain the failure by the bankrupts’ to make a Statement of Affairs. The Trustees in this case wish to distribute dividends to creditors. They say they have been able to identify the existence of creditors; have published notices calling for proofs of debt; and have received some proofs of debt from creditors. They have, importantly, realised the assets of the estate sufficient to declare a dividend. The Trustee, through the affidavit of Mr Peldan, which sets out the history of his negotiations and correspondence with Mr and Mrs Troiani, says that he wishes to distribute the dividends to creditors and thereafter to conclude the administration.
I am satisfied that the Trustee has taken all reasonable steps to obtain a Statement of Affairs and that Mr and Mrs Troiani have failed to supply a Statement of Affairs deliberately. It seems to me, in the interests of the creditors, and in the public interest, that the distribution of dividends to creditors of the bankrupt estates of Mr and Mrs Troiani should not be further delayed. There is nothing in the material of Mr and Mrs Troiani today which, regrettably for them, in any way challenges the judgments relied upon consistently in these proceedings. This is not a forum that can review those judgments in my view in this application.
As a result I propose to make the orders sought by the applicants, as set out at the commencement of these reasons

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Baumann FM

Associate:

Date: