Re Begic, Z.; Ex Parte Begic, Z.

[1991] FCA 913

9 1 3 Q\

JUDGMENT No .......,-....... ,........ .

S : A T C H W O R D S

BANKFtUPTCY - application for discharge - principal creditor Commissioner of Taxation - proof of debt reduced by negotiation - all outstanding amounts claimed paid in full - evidence of some lack of co-operation by bankrupt - evidence unsatisfactory - lack of understanding of obligations - no

public interest in continuing bankruptcy.

RE: ZDRAVKO BEGIC EX PARTE: ZDRAVKO BEGIC

NO. 112 O F 1991

FRENCH J.
PERTH

3 DECEMBER 1991

IN THE FEDERAL COURT

OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT

OF THE STATE OF

WESTERN AUSTRALIA No. 112 of 1991
RE: ZDRAVKO BEGIC

Bankrupt

EX PARTE: ZDRAVKO BEGIC

Applicant

MINUTE OF ORDER

JUDGE MAKING ORDER:	FRENCH J.
DATE OF ORDER:	3 December 1991
WHERE MADE:	Perth
THE COURT ORDERS THAT:

The Bankrupt is discharged.

Note: Settlement and entry of Orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT	)
OF AUSTRALIA
GENERAL DIVISION	1
BANKRUPTCY DISTRICT
OF THE STATE OF	1
WESTERN AUSTRALIA	1 No. 112 of 1991

RE: ZDRAVKO BEGIC

Bankrupt

EX PARTE: ZDRAVKO BEGIC

Applicant

CORAM:	FRENCH J.
3 December 1991

EX TEMPORE REASONS FOR JUDGMENT

Zdravko Begic became a bankrupt on his own petition on 21 January 1991 and now applies for discharge pursuant to s.150 of the Bankruptcv Act 1966. The report prepared by the Official Trustee, which in this respect is not disputed, indicates that as at the date of his bankruptcy he was described in his statement of affairs as a single invalid pensioner, 43 years of age with three dependent children, their ages ranging from eight months to 16 years. His	previous occupation was a motor mechanic but he had been	unable to continue in that trade because of ill health. A
primary reason for his bankruptcy was said to be pressure from his sole creditor, the Commissioner for Taxation, for the payment of outstanding income tax which, at the date of bankruptcy, was said to amount to $312,000. Mr Begic claimed that he disputed the assessment but could not afford to pay

,. e	and was left with no option but to file for bankruptcy.
, I
At his first interview he supplied a copy of a letter dated 12 November 1990 from a firm of solicitors who advised him to seek the services of a registered taxation agent to dispute the assessment. In his statement of affairs he disclosed assets amounting to $4,590 and liabilities of $312,000. The assets comprised: cash at bank $90; motor vehicle $2,000; household furniture and effects $2,000 and an unknown interest in a property in Henley Brook. Subsequently he was found to have an interest in real property at Lot 2 on Strata Plan 20167, certificate of Title Volume 1874 Folio 612. The statement of affairs disclosed a liability for $312,000 in relation to the Commissioner for Taxation. A proof of debt was received from the Commissioner for Taxation claiming a total amount of $209,033.15. An accompanying statement of account set out outstanding income tax for the years ended 30 June 1987 to 1989 inclusive amounting to that sum. The Official Trustee admitted the proof on 10 June. A further proof of debt for $16 for land tax was also admitted. By a letter dated 15 August 1991 the Commissioner of Taxation amended his claim to $62,769.54 apparently as the result of a
meeting between the bankrupt and the Commissioner held on 14
August. A payment of a first and final dividend of 22.618 cents in the dollar was made on 30 August 1991.
The Henley Brook property realised $18,000 and site shed and building supplies also sold realised $1,500 making a total of $19,500. After the payment of that dividend Mr Begic entered into further negotiations with the Australian Taxation Office and as a result of those negotiations the Commissioner agreed to amend the tax liability downwards again to $17,192. This was expressed to be conditional on the bankrupt's medical condition being classified as serious and life threatening and the disclosure of his financial status to the Official Trustee being materially accurate. A handwritten receipt from an authorised officer of the Commissioner dated 18 September was presented to the Official Trustee by the bankrupt on the same day and this acknowledged a payment of $3,048.82 to the Commissioner on 18 September 1991. The Australian Taxation Office amended the balance of its claim in the estate to nil, and State Taxation authorities have been paid in full. The position as it presently stands therefore is that as a result of negotiation with creditors, all claims have been discharged.
Neither the Trustee's report nor Mr Begic's evidence discloses the basis upon which the reduction in the claim made by the Commissioner for Taxation was reached. The expressed conditions relating to the medical condition of the bankrupt
are, at least in respect of the first condition, somewhat and disclosure of his financial status to the Official Trustee
mysterious. The Official Trustee reports that the bankrupt's conduct prior to and subsequent to the date of bankruptcy has been less than satisfactory. It is said that he has refused to provide the Deputy Commissioner of Taxation or the Trustee with financial statements for the years ended 30 June 1987 to 30 June 1990 and has repeatedly refused to provide information when requested which would assist the Trustee to administer the estate. Instances of lack of co-operation were cited in relation to two items of correspondence and a telephone conversation. The report goes on to say that inquiries by the Trustee with the Commissioner indicated that the disputed assessment was based on numerous property transactions during the years preceding the bankruptcy, yet these property transactions were not disclosed in the statement of affairs.
M r Begic's reluctance to provide the Trustee with financial
statements of previous years, it was said, appears to amount
to a breach of certain provisions of the Bankru~tcv Act 1966.
A meeting held with the bankrupt on 6 September disclosed that he had been the joint registered proprietor of a property since 20 February but had not notified the Trustee. He revealed his interest at the meeting and said he was acting only as trustee for his children. He claimed to have made inquiries about this with the Official Trustee at the date of his bankruptcy and the claim was repeated in his evidence. Records of the Official Trustee indicate that such an inquiry
was made on 2 April, yet records from the Registrar of Titles indicate that he had already become the joint registered
proprietor on 20 February. The Official Trustee contends that there is evidence the bankrupt has omitted to keep and preserve books, accounts or records as sufficiently disclose his business transactions and financial position within the period of five years immediately preceding the date on which he became a bankrupt and that he has contributed to his own bankruptcy by the neglect of his business affairs.
On the material before me I cannot come to a conclusion one way or the other as to whether the bankrupt has omitted to keep and preserve books, accounts or records, or has contributed to his own bankruptcy by the neglect of his business affairs. There is a level of generality in the Trustee's report which, when coupled with M r Begicts evidence, does not enable me to draw the conclusion that the matters set out in sub-S. 150(6) have been established to the required standard of persuasion. There seems to have been some antagonism developed between himself and the Official Trustee's office as a result of his adverse view of their disposition of his property but that, of course, is a not unfamiliar complaint. The Official Trustee's job is to get the property in and realise it promptly in order that the creditors' claims may be met and discharged and there is no basis upon which, on the evidence that I have heard, there was anything inappropriate about the way in which the property was disposed of in this case.
The position today is that the creditors have been paid in full, albeit as the result of a negotiated reduction in the Commissioner's claim. I can make no judgment that they made concessions which were in any way inappropriate or influenced by the fact of bankruptcy. The question is whether there is any public interest in maintaining this administration. In my opinion there is not. Whilst there appears to be evidence of some lack of co-operation, it also may well be the case that that has emanated from a lack of understanding to some extent of his obligations on the part of Mr Begic. In any event, this case has reached the point where
there is no public interest to be served by a continuance of the bankruptcy beyond some punitive objective, which is not, of course, part of the policy of the legislation. I am not satisfied, as I have indicated, that I have sufficient evidence from which to conclude that the matters referred to in sub-s.150(6) have been established. I propose, in the circumstances, to discharge the bankrupt.

I certify that the preceding six (6)
pages are a true copy of the Ex Tempore Reasons

for Judgment of his Honour Justice French.

Associate:  J t / M o b / p A @ ~ M b y

Date:  3 ~ x c e w h&+ /c191

M r Z. Begic appeared in person.

Miss C.J. Stabb appeared on behalf of the Official Trustee.

Date of Hearing: 3 December 1991 Date of Judgment: 3 December 1991