Re Eylward, Ex parte Jones

[2008] FMCA 747

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RE EYLWARD; EX PARTE JONES [2008] FMCA 747

BANKRUPTCY – Failure to file a Statement of Affairs – distribution of dividends to creditors.

Bankruptcy Act1966 (Cth) ss.54, 77C, 146

Harrison v Del Santo [2007] FMCA 470
Official Trustee in Bankruptcy v Raeffaele [2003] FCA 328
Official Trustee in Bankruptcy v Thor [2006] FMCA 1637
Re Rees; Stubberfield v Stubberfield [1999] FCA 1862
Re Sturt; Ex parte Official Trustee in Bankruptcy (2001) 117 FCR 1

Applicant: MICHAEL GREGORY JONES (AS TRUSTEE IN BANKRUPTCY)

Re: BANKRUPT ESTATE OF JOAN EYLWARD

File number: SYG 1098 of 2008

Judgment of: Barnes FM

Hearing date: 3 June 2008

Delivered at: Sydney

Delivered on: 3 June 2008

REPRESENTATION

Solicitors for the Applicant: Sally Nash & Co.

ORDERS

1. The distribution of dividends to those creditors who have proved their debts in the bankrupt estate of Joan Eylward proceed in accordance with Division 5 of Part VI of the Bankruptcy Act 1966 as if the bankrupt had filed a Statement of Affairs and that creditors had been stated to be those creditors in it pursuant to section 146 of the Bankruptcy Act 1966 as amended. 

2. The costs of this application be costs in the estate. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1098 of 2008

MICHAEL GREGORY JONES (AS TRUSTEE IN BANKRUPTCY)

Applicant

And

BANKRUPT ESTATE OF JOAN EYLWARD

Re

REASONS FOR JUDGMENT

(Revised from Transcript)

1. This is an application under s.146 of the Bankruptcy Act1966 (Cth) made ex parte by Michael Gregory Jones as trustee of the estate of Joan Eylward, a bankrupt. The trustee seeks an order pursuant to s.146 that distribution of dividends to creditors who have proved debts in the bankrupt estate proceed in accordance with Division 5, of Part VI of the Act as if the bankrupt had filed a Statement of Affairs and those creditors had been stated to be creditors in it. The trustee also seeks an order that the costs of this application be costs paid out of the estate of the bankrupt.

2. In support of the application reliance is placed on an affidavit of Michael Gregory Jones sworn on 22 April and filed on 30 April 2008 and an affidavit of Daniella Fazio sworn and filed on 3 June 2008. In his affidavit Mr Jones set out the history of this matter, attempts made to contact and notify the bankrupt of her obligation to file a Statement of Affairs and matters relevant to identification of creditors. Ms Fazio’s affidavit addressed unsuccessful attempts to obtain current contact details for the bankrupt in response to concerns I raised about the ex parte nature of the application.

3. A sequestration order was made by this Court against the estate of Ms Eylward on 16 March 2006. The Deputy Commissioner of Taxation was the petitioning creditor. Mr Jones was appointed her trustee in bankruptcy on 31 March 2006. There is evidence before the Court that at the date of the bankruptcy the bankrupt and her husband were registered proprietors of real property at Engadine NSW which was mortgaged to ING Bank (Australia) Limited. The property was sold by ING as mortgagee in possession and the surplus representing the interest of the bankrupt in the sum of $48,934.47 was forwarded to the trustee.

4. The bankrupt has not filed a Statement of Affairs. It appears from Mr Jones’ affidavit that a number of unsuccessful attempts were made by the trustee to obtain a Statement of Affairs from the bankrupt. These attempts were complicated by the fact that the property in which she lived was sold. The trustee obtained a new address for the bankrupt after the sale of her property. Copies of a file note of a telephone call on 20 April 2006 between an employee of the trustee and the bankrupt in relation to her address and Statement of Affairs and a time costs ledger referring to further unsuccessful attempts to obtain a Statement of Affairs which were provided by the trustee to ITSA Bankruptcy Fraud Investigation are before the Court. Letters were sent by the trustee to the bankrupt seeking a Statement of Affairs by registered post not only to the original address but also to the subsequent address notified to the trustee. There is evidence of confirmation of delivery of that mail.

5. A notice to the bankrupt under s.77C(1)(a) of the Act, dated 23 March 2007 states that on 7 March 2007 she was convicted pursuant to s.54 of the Bankruptcy Act for failing to file a Statement of Affairs with the Official Receiver and furnish the trustee with a copy of the Statement of Affairs. She was fined $550.

6. It appears from the affidavit of Mr Jones that several unsuccessful attempts were made by a process server to serve the bankrupt with this notice and that ultimately the documents were given to a family member of the bankrupt on 9 June 2007 at the address which she had indicated that she lived, despite the fact she was said to have left that address and that her whereabouts were said to be unknown. She has however not filed the requested Statement of Affairs.

7. Ms Fazio attested to enquiries made to locate the bankrupt, including an electronic White Pages search in which the only number which was found under the name of J. Eylward was a number for an address at Malabar. Advice from the operator was that the phone line had been disconnected. No other telephone numbers were found for the bankrupt.

8. I am satisfied that there is evidence before the Court of the attempts of the trustee to notify the bankrupt of her obligation to file a Statement of Affairs and that she has not done so. I note that an advertisement was inserted in a newspaper on 14 February 2008 of a notice of intention to pay a final dividend in the estate of Ms Eylward.

9. I considered whether it was appropriate to delay the hearing or to stay the orders sought to allow the trustee to attempt to notify the bankrupt and give her an opportunity to respond (see Official Trustee in Bankruptcy v Raeffaele [2003] FCA 328). However it is apparent from the affidavit of Mr Jones that no interest has been expressed by the bankrupt in her affairs. I am conscious that while there is a relatively small amount now left in the estate, there is some money available to be distributed to creditors after the costs of administration are met. I see no advantage to the bankrupt but rather a disadvantage to the creditors in any further delay. I am not satisfied that further delay is warranted.

10. I have borne in mind the nature of the proceedings that are before the Court and have had regard to the matters that have been considered relevant to an application under s.146 in decisions such as Re Rees; Stubberfield v Stubberfield [1999] FCA 1862; Harrison v Del Santo [2007] FMCA 470; Official Trustee in Bankruptcy v Thor [2006] FMCA 1637 and the principles discussed by Sackville J in Re Sturt; Ex parte Official Trustee in Bankruptcy (2001) 117 FCR 1.

11. There is evidence before the Court that the bankrupt has failed to file a Statement of Affairs (see Re Sturt) despite attempts by the trustee to obtain such a statement on a number of occasions and the successful prosecution of the bankrupt. There is no evidence of any response from the bankrupt to the request for the Statement of Affairs. Indeed the trustee’s evidence is that since undertaking the administration of the bankrupt's estate he has had no personal contact with the bankrupt, notwithstanding letters seeking contact and the provision of information.

12. I accept on the information before me that the administration of the bankruptcy is complete save for the distribution of a dividend to creditors who have proved their debts. There is affidavit evidence of creditors known to the trustee. The petitioning creditor was the Deputy Commissioner of Taxation. The trustee’s enquiries and advertisement have identified only two other unsecured creditors: Nepote Pty Limited (In Liquidation) and Credit Corporation Limited.

13. Details of those creditors and the debts and the only known asset of the estate (the balance of the bankrupt’s share of the proceeds of sale of the Engadine property) are before the Court. Delay is causing prejudice to creditors in the requisite sense. The bankruptcy has been in force since March 2006. There has been no payment of the amounts due. It is relevant in that respect that one of the creditors is a company in liquidation where a claim has been made by that company for the repayment of a director's loan account which is being pursued by the liquidator.

14. Having regard to the time that has passed and the fact that there is some money available in the estate which has been calculated to provide a dividend to the creditors in the order of 33.95 cents in the dollar, in all the circumstances I am satisfied on all the material before the Court that it is appropriate to make the orders sought by the applicant.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate: 

Date:  13 June 2008