Playford and Inspector-General in Bankruptcy
[2018] AATA 19
•15 January 2018
Playford and Inspector-General in Bankruptcy [2018] AATA 19 (15 January 2018)
Division:TAXATION & COMMERCIAL DIVISION
File Number(s): 2017/3909
Re:Matthew Playford
APPLICANT
AndInspector-General in Bankruptcy
RESPONDENT
DECISION
Tribunal:Ms G Lazanas, Senior Member
Date:15 January 2018
Place:Sydney
The decision of the delegate of the Inspector-General dated 6 June 2017 is affirmed.
...................................[sgd]..................................
Ms G Lazanas, Senior Member
CATCHWORDS
Bankruptcy – discharge — trustee's objection – bankrupt failed to disclose bank account monies – decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth), s 43
Bankruptcy Act 1966 (Cth), ss 149D, 149K, 149N, 149Q
CASES
Frost v Sheahan (2005) 220 ALR 733
Mango Boulevard Pty Ltd v Whitton and Ors (2015) 333 ALR 471
Neffati and Inspector-General in Bankruptcy [2016] AATA 941
REASONS FOR DECISION
Ms G Lazanas, Senior Member
15 January 2018
BACKGROUND
Mr Matthew William Playford was made bankrupt pursuant to a sequestration order made on 29 May 2013. Mr Gregg Robertson Johnson was appointed as the trustee of his estate (“the trustee”).
Mr Playford was due to be discharged from his bankruptcy on 18 February 2017 unless his trustee objected. Such an objection was filed on or about 8 February 2017 in reliance on five grounds. Subsequently, the trustee ceased to object on four grounds but pressed the 5th ground set out in s 149D(1)(n) of the Bankruptcy Act 1966 (“the Bankruptcy Act”). This was on the basis that Mr Playford failed, whether intentionally or not, to disclose to the trustee his beneficial interest in any property.
The relevant non-disclosure was a bank account with BankSA which had a credit balance of $84,216.38 as at the date of his bankruptcy. The funds in that account were withdrawn by Mr Playford progressively between 21 and 27 June 2013 and the account was subsequently closed.
On 24 March 2016, the trustee wrote to Mr Playford seeking an explanation of his failure to disclose the bank account and requiring him to repay the funds to the bankrupt estate. This correspondence was followed up by the trustee sending further letters on 16 August 2016 and on 22 May 2017. Mr Playford stated at the hearing that he had not failed to disclose the bank account monies and, separately, that he and his former solicitor had explained the situation to the trustee in conversations. I will come to Mr Playford’s version of events and submissions shortly.
There was a further non-disclosure by Mr Playford of a Westpac cheque issued in October 2012 by South Australian Police in the sum of $67,975 to Mr Frank Johnson which was later deposited into a bank account with Beyond Bank in the name of Frank Johnson in March 2013. “Frank Johnson” was one of many aliases of Mr Playford. The non-disclosure of the cheque was uncovered during further investigations by the trustee in July 2015 and was information that was provided by the trustee in support of his notice of objection.
On 6 June 2017, a delegate of the Inspector-General of Bankruptcy reviewed the trustee’s decision to file a notice of objection to discharge and affirmed the objection on the remaining ground referred to above.
On 29 June 2017, Mr Playford sought a review of the delegate’s decision by filing an Application for Review in the Administrative Appeals Tribunal.
I have decided to affirm the decision of the delegate of the Inspector-General in Bankruptcy. I am satisfied that the requirements of s 149N of the Bankruptcy Act were not met and that the Inspector-General was correct to not cancel the trustee’s objection. In particular, I am satisfied there is sufficient evidence to support the existence of the ground. I am also satisfied that the reasons given for the objection on that ground justify the making of the trustee’s objection.
ISSUES
The issues before the Tribunal are whether the Tribunal is satisfied that:
(a)the ground on which the objection was made was not a ground in s 149D(1); or
(b)there is insufficient evidence to support the existence of the ground; or
(c)the reasons given for objecting on that ground or those grounds do not justify the making of the objection; or
(d)a previous objection that was made on that ground included that ground or those grounds, was cancelled.
I deal with each of these issues below after setting out, in broad terms, the relevant law and principles which apply to the determination of this matter.
RELEVANT LAW AND PRINCIPLES
The Tribunal’s power to review the decision of the delegate of the Inspector-General is contained in s 149Q of the Bankruptcy Act. That provision confers only those powers that are conferred on the Inspector-General under s 149N of the Bankruptcy Act when reviewing a trustee’s decision to file a notice of objection. It does this by providing that an application may be made to the Tribunal for review of “a decision of the trustee to file a notice of objection”. The decision of the Inspector-General is made under s 149K(5)(b) and must be made within the parameters set by s 149N. Therefore, so must the decision that the Tribunal makes on review: Neffati and Inspector-General in Bankruptcy [2016] AATA 941.
Under s 149N(1) of the Bankruptcy Act, the Inspector-General must cancel the objection if, on review of the trustee’s decision to file the notice of objection, the Inspector-General is satisfied that:
(a)the ground on which the objection was made was not a ground specified in s 149D(1); or
(b)there is insufficient evidence to support the existence of the ground; or
(c)the reasons given for objecting on that ground do not justify the making of the objection; or
(d)a previous objection that was made on that ground included that ground or on grounds that included that ground, was cancelled.
Section 43(1) of the Administrative Appeals Tribunal Act1975 sets out the powers of the Tribunal for the purpose of reviewing a decision under a relevant enactment and provides, as follows:
(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:
(a) affirming the decision under review;
(b) varying the decision under review; or
(c) setting aside the decision under review and:
(i) making a decision in substitution for the decision so set aside; or
(ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.
Is the ground on which the objection was made, a specified ground?
The delegate of the Inspector-General decided that on its face the ground taken by the trustee was a ground specified in s 149D(1) and I find she was correct in doing so under s 149N(1)(a) of the Bankruptcy Act. Mr Playford did not dispute that he had a beneficial interest in the funds in the bank account with BankSA. While Mr Playford claimed at the hearing to have disclosed the monies held with BankSA to the trustee at all relevant times and referred to item 38 in Part D of his Statement of Affairs, that item clearly did not reference any bank account monies with BankSA. Item 38 in Part D of the form relates to liabilities, namely, secured creditors and reveals that Mr Playford had a home loan with BankSA. The bank account monies held on deposit with BankSA were obviously an entirely different matter and were not listed at item 23 in Part C of the Statement of Affairs which is where they should have been disclosed as one of Mr Playford’s assets. Item 23 in Part C requires details of all accounts held with banks and other financial institutions within the last 12 months, which Mr Playford failed to accurately complete. Mr Playford was disingenuous in asserting that he had disclosed in his Statement of Affairs all his bank accounts and dealings with BankSA.
Is there sufficient evidence to support the existence of the ground?
The delegate referred to the evidence relied on by the trustee and in her assessment found that there was sufficient evidence to support the existence of the ground: s 149N(1)(b) of the Bankruptcy Act. I agree that there was sufficient evidence and was also impressed by the delegate’s diligent efforts to seek additional information from the trustee in order to satisfy herself that the objection was properly maintained, including her letters to the trustee dated 3 October 2017 and 19 October 2017 requesting specific details and supporting documents which were in evidence as Supplementary T-Documents.
The evidence comprised the fact that the trustee made clear to Mr Playford that he required the sum of $84,216.38 to be returned to the estate and that repayment of the monies has not occurred. The trustee had repeatedly requested explanations for the non-disclosure of the funds in the account with BankSA as well as information about how the funds had been disbursed. Further, the trustee’s investigations revealed that Mr Playford failed to disclose expenditure of various other funds which are the subject of ongoing investigations. These requests for information went unanswered.
The only response on behalf of Mr Playford is recorded in a file note on 7 April 2017 of a conversation the trustee had with Mr Playford’s former solicitor. The trustee provided a copy of that file note to the delegate and explained in correspondence with the delegate that Mr Playford’s then solicitor did not offer any explanation for Mr Playford’s failure to provide information required by the trustee, contrary to the assertions made by Mr Playford that the situation had been explained to the trustee “as best he knew how”. The trustee stated in a letter to the delegate dated 18 October 2017, as follows:
The majority of the conversation [with Mr Playford’s solicitor] was in relation to the Bankrupt’s medical issues and history. In relation to the actual objection, we had a general discussion about the objection grounds and I confirmed that my requests for information had not been satisfactorily responded to.
Subsequently, in response to another letter from the delegate asking for further clarification, the trustee stated in his letter dated 24 October 2017, as follows:
I consider that the Bankrupt has not been fully co-operative in relation to this matter which is why I disagreed with his comment “as best he knows how”. His responses have focused on his health issues and an inability to recall the issue at hand rather than focusing on providing an explanation of why he failed to disclose the assets and how the bank account funds were used. To me such a response does not appear to be consistent with someone who is fully cooperative.
Indeed, it was telling, that Mr Playford did not volunteer at the Tribunal hearing what the explanation was, if any, that he claimed he and/or his former solicitor had given to the trustee.
Do the reasons given for objecting justify the making of the objection?
The trustee gave reasons for the Notice of Objection: s 149N(1)(c) of the Bankruptcy Act. I am satisfied that the reasons given justify the making of the objection. In particular, Mr Playford’s non-disclosure of the monies in the account with the BankSA was a serious matter involving a significant amount of money and there was no explanation provided as to his failure to disclose the monies to the trustee. Nor did Mr Playford attempt at any stage to account for the non-disclosed bank account funds, despite numerous requests by the trustee to do so.
Was a previous objection made on that ground that was cancelled?
The delegate conducted a search of the National Personal Insolvency Index and there was no previous objection based on the remaining ground that was cancelled.
MR PLAYFORD’S SUBMISSIONS
Mr Playford appeared at the hearing and provided both written and oral submissions in respect of his position. His key submission was that the delegate of the Inspector-General failed to consider the issue of future utility of the objection and whether the trustee had any feasible or reasonable plan in making the objection in circumstances where Mr Playford, according to his submission, had nothing more to give. Mr Playford also submitted that the trustee had had every reasonable opportunity to conduct an efficient and thorough administration of the bankrupt estate over several years and that Mr Playford had fully co-operated with the trustee. He claimed the trustee wanted to punish him by extending his period of bankruptcy. Mr Playford also argued that the maintenance of the trustee’s objection is inconsistent with parliamentary intention to not punish a bankrupt for acts taken by the bankrupt which cannot be rectified in circumstances where there would be no further realisations, which Mr Playford asserted was his situation. Mr Playford claimed that the trustee’s power of objection is one of last resort, to be used sparingly and for the purpose of assisting to remind the bankrupt of their obligations. He cited the decisions of Frost v Sheahan (2005) 220 ALR 733 and Mango Boulevard Pty Ltd v Whitton (2015) 333 ALR 471 to support the latter proposition. Finally, Mr Playford also argued that the trustee did not take account of his medical issues.
I agree with the submissions put by counsel for the Inspector-General that the matters raised by Mr Playford were mostly irrelevant considerations and argumentative in nature and, more significantly, did not address the precise requirements set out in s 149N of the Bankruptcy Act. Additionally, there was no evidence to support Mr Playford’s assertions including that the trustee wished to punish him.
On the other hand, there was cogent evidence that Mr Playford had not disclosed the bank account monies with BankSA to the trustee and had not fully co-operated with the trustee in his investigations. I agree with the submission of counsel for the Inspector-General that the trustee correctly observed the objection to Mr Playford’s discharge serves the purpose of requiring him to co-operate more fully with the trustee in his administration and to fully and frankly disclose matters to the trustee and, further, that that obligation would be significantly reduced if Mr Playford were discharged from bankruptcy. Additionally, if health issues were a factor, it is difficult to understand how those matters were an issue in dealing with matters required to be answered by the trustee, especially as Mr Playford was a practicing solicitor at the time of his bankruptcy and he also subsequently engaged a solicitor to deal with issues arising from his bankruptcy including, as noted above, liaising on his behalf with the trustee. In all the circumstances, I was not persuaded by Mr Playford that the decision of the delegate of the Inspector-General was incorrect.
CONCLUSION
For the reasons given, the decision of the delegate of the Inspector-General dated 6 June 2017 is affirmed.
I certify that the preceding 25 (twenty-five) paragraphs are a true copy of the reasons for the decision herein of Ms G Lazanas, Senior Member
........................................................................
Associate
Dated: 15 January 2018
Date of hearing: 1 December 2017 Applicant: In person Counsel for the Respondent: Mr M Heath Advocate for the Respondent: Australian Financial Security Authority
3
0