Re Trease, D.R. v Ex parte Trease, D.R
[1995] FCA 494
•14 JULY 1995
CATCHWORDS
BANKRUPTCY - application for abridgment of period of time for discharge from bankruptcy - objection by trustee to discharge under s 149D(1)(b) Bankruptcy Act 1966 - failure by bankrupt to file statement of affairs, but provision of statement of affairs to trustee - subsequent amendment to Bankruptcy Act 1966 substituting discharge period of three years from date of filing statement of affairs in lieu of discharge upon expiration of three years from date of bankruptcy - subsequent filing of statement of affairs - whether period of discharge should run from lodging of first statement of affairs with trustee - whether bankrupt should be treated as if statement of affairs filed as at date of provision to trustee - effect of trustee's objection to discharge.
Bankruptcy Act 1966 (Cth) ss 30, 33, 54, 149, 149B, 149D, 149G
Bankruptcy Amendment Act 1991 (Cth) s 27
Corporations Law ss 91A, 229
Re Rohde (1993) 42 FCR 149
Re: DOUGLAS RICHARD TREASE
Ex parte: DOUGLAS RICHARD TREASE
No NB 3459 of 1991
Tamberlin J
Sydney
14 July 1995
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION, BANKRUPTCY DISTRICT ) No NB 3459 of 1991
OF THE STATE OF NEW SOUTH WALES )
RE: DOUGLAS RICHARD TREASE
The Bankrupt
Ex PARTE: DOUGLAS RICHARD TREASE
Applicant
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 14 JULY 1995
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The application be dismissed.
The applicant pay the trustee's costs of this application.
NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION, BANKRUPTCY DISTRICT ) No NB 3459 of 1991
OF THE STATE OF NEW SOUTH WALES )
RE: DOUGLAS RICHARD TREASE
The Bankrupt
Ex PARTE: DOUGLAS RICHARD TREASE
Applicant
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 14 JULY 1995
REASONS FOR JUDGMENT
TAMBERLIN J:
The application before me was filed on 25 May 1995 by the bankrupt, Mr Trease. It seeks an order that the period of time for discharge of his bankruptcy be abridged pursuant to s 33(1)(c) of the Bankruptcy Act 1966 (Cth) ("the Act") to three years from 12 December 1991. In addition a declaration is sought, pursuant to s 30 of the Act that the bankrupt is discharged from bankruptcy as and from 12 December 1994.
The application is opposed by the trustee on the ground that no case has been made out and also on the ground that an objection has been made under s 149D(1)(b) of the Act based on the claim that the bankrupt continued to manage a corporation without having been given leave to do so under s 229 of the Corporations Law ("the Law").
Statutory Provisions
The relevant provisions of the Act are:
"30(1)The Court:
........ ........ ........ ......
(b)may make such orders (including declaratory orders ...) as the Court considers necessary for the purposes of carrying out or giving effect to this Act ...."
"33(1)The Court may:
........ ........ ........ ........ ........ ........ ........ ........
(c)extend before its expiration or, ......, any time limited by this Act...., for doing an act or thing or abridge any such time."
"54(3)A bankrupt who fails to file a statement of affairs as required by subsection (1) or (2) is guilty of contempt of court."
"149B... at any time before a bankrupt is discharged from bankruptcy under section 149, the trustee or Official Receiver may file with the Registrar a written notice of objection to the discharge".
"149D(1)The grounds of objection that may be set out in a notice of objection are as follows:
........ ........ ...
(b)after the date of the bankruptcy the bankrupt continued to manage a corporation as mentioned in section 91A of the Corporations Law without having been given leave to do so under section 229 of that Law;"
"149GAn objection takes effect at the beginning of the day on which the notice of objection is filed".
In the present case s 149(3) is also relevant. That subsection provides that where the bankruptcy occurs before the commencement of s 27 of the Bankruptcy Amendment Act 1991 (Cth):
".... the bankrupt is discharged at:
(a)the end of the period of 3 years from the date on which the bankrupt filed his or her statement of affairs; or
(b) the commencement of that section;
whichever is the later."
The relevant provisions in the Corporations Law are:
"91A(2)A person manages a local corporation if the person, in this jurisdiction or elsewhere, is a director or promoter of, or is in any way (whether directly or indirectly) concerned in or takes part in the management of, the corporation."
"229(1)An insolvent under administration must not, without the leave of the Court, manage a corporation."
History
The sequestration order was made on 21 November 1991 when Mr Max Donnelly was appointed trustee.
On 25 November 1991 Mr Donnelly sent a letter to the applicant which enclosed extracts from the Act which, it was expressly pointed out, should be heeded by him as a bankrupt. Particular attention was drawn, in the covering letter to the requirements of s 54 of the Act in relation to the lodgment of a statement of affairs of assets and liabilities with the Registrar in Bankruptcy. A copy of that section was sent to the bankrupt including the provision in subsection (3) which provides that where a bankrupt fails to file a statement of affairs as required he or she is guilty of contempt of court. The letter made it clear that the bankrupt had an obligation to file a statement of affairs.
On 12 December 1991 a statement of affairs was provided by he bankrupt to the trustee. This was never filed with the Registrar.
The report of the trustee was sent by the trustee to all known creditors on 6 January 1992, together with a copy of the statement of affairs furnished to the trustee.
On 14 January 1992 the report of the trustee was tabled, together with the bankrupt's statement of affairs, at the first meeting of creditors. At that meeting the chairman advised the bankrupt that it was necessary to establish whether he owed moneys to certain creditors as shown in the trustee's report and he was questioned as to why he did not disclose these creditors, in his statement of affairs, as disputed creditors.
On 1 July 1992 the amendments to the Act came into force and these amendments substituted a discharge period of three years from the date on which the bankrupt filed the statement of affairs in substitution for the previous provision in s 149(1), which provided for discharge from bankruptcy upon the expiration of three years from the date of the bankruptcy.
On 9 July 1992 there was a public examination of the bankrupt.
On 22 July 1992 the trustee wrote to the bankrupt and enclosed a copy of a further statement of affairs for completion. The letter pointed out that the trustee had been informed by the Registrar in Bankruptcy that the bankrupt had not yet filed his original statement of affairs with the Registrar in accordance with s 54(1). The trustee pointed out that he had previously drawn the bankrupt's attention specifically to this section and had enclosed a copy of it. He further suggested that the bankrupt file the document "in all haste" as the period of the bankruptcy would not commence until the date of filing.
On 19 October 1992, about three months later, no statement of affairs having been received by the trustee, he again wrote to the bankrupt pointing out that no copy of the statement of affairs had been filed nor had the trustee been furnished with a copy of the second statement of affairs.
Apparently in response to this letter, the bankrupt on 25 October 1992 signed a second statement of affairs and sent it to the trustee. This statement of affairs was filed with the Registrar in Bankruptcy at about that time.
On 5 July 1994 a Notice of Objection was lodged by the trustee to the discharge of the bankrupt.
On 17 August 1994 an application for review was lodged by the bankrupt and on 30 August 1994, the Inspector-General upheld the trustee's objection. On 6 September 1994 there was an application to review the Inspector-General's decision and on 22 March 1995 the Administrative Appeals Tribunal ("AAT") heard the matter. On 3 April 1995 the AAT set aside the decision of the Inspector-General.
On 25 May 1995 the application for the discharge of the bankrupt and for the declaration, which is presently before me, was filed.
On 28 June 1995 the second Notice of Objection to Discharge was filed by the trustee based on s 149D(1)(b) of the Act which relates to managing a corporation whilst insolvent.
On 3 July 1995 the bankrupt filed an affidavit denying involvement in the management of the company Numurkah Haulage Pty Limited which, as its name suggests, carried on a haulage business. The bankrupt says that after he became bankrupt his sons set up Numurkah Haulage Pty Limited and that he had never been involved in the management of the business which he said is that of his sons.
Submissions
For the bankrupt it is pointed out that, but for the 1992 amendments to the Act (effective from 1 July 1992), the automatic discharge period would have been three years from the date of the bankruptcy. After the amendments came into force the appropriate period became three years from the filing of the statement of affairs. It was submitted that, in the present case, the three year period should run from 12 December 1991 when the first statement of affairs was furnished to the trustee. It is said that the trustee had a sufficiently adequate statement of affairs to enable the holding of the first meeting of creditors on 14 January 1992. It is further said that if the bankrupt had filed the statement of affairs on 12 December 1991 then there would have been a discharge as at 12 December 1994 in the ordinary course. Further, it is claimed, the bankrupt has been disadvantaged because the discharge period has been extended by, in effect, a further year as a result of the statement of affairs not being filed until about 25 October 1992. The bankrupt, it is submitted, should not be penalised for inadvertence. It is also suggested that the bankrupt had believed that the filing of the statement of affairs would be done by the trustee. The argument, in substance, is that the bankrupt should be treated as if the statement of affairs had been filed on 12 December 1991.
Reference was made to the decision of this Court in Re Rohde (1993) 42 FCR 149, where Burchett J held that, in circumstances where a trustee omitted promptly to file a statement of affairs which had been forwarded to him by a bankrupt in accordance with what was described as "the normal practice", it was appropriate in the "very special circumstances" of that case to abridge the period of three years to a period of two months under s 33 (1)(c) of the Act.
However, that case is different from the present because there was no objection under s 149D raised against the discharge. There was no evidence before me of any practice, either of Mr Donnelly or of any other trustee in 1991-1992 to file a statements of affairs on behalf of a bankrupt. On the contrary, there was evidence before me that a copy of the section had been sent by the trustee to the bankrupt under cover of a letter which specifically drew his attention to the requirement for lodgement of the statement of affairs, both with the Registrar in Bankruptcy and the trustee. In my view, on a fair reading of that letter it was evident that the trustee was not undertaking to file the statement of affairs on behalf of the bankrupt. In addition, in the present case, there has been substantial delay by the bankrupt in the period July to October 1992 in filing the second statement of affairs after it had been pointed out to him that he had not filed a statement of affairs, and in relation to the period of his bankruptcy, the time ran from the date of the filing of the statement of affairs. There were also some indications in the evidence that the first statement of affairs was not satisfactory. The letter of the trustee on 25 November 1991 had enclosed a copy of s 54(3) of the Act which provides that it is contempt of court if the statement of affairs is not filed by the bankrupt in accordance with the Act. Failure to file the statement of affairs by the bankrupt clearly is treated as a serious matter by the Act.
In relation to the objection lodged by the trustee under s 149D the bankrupt submits that this objection is irrelevant to the abridgment application, because if the abridgment application were granted the bankruptcy ceased as at 12 December 1994 and the objection is in effect simply too late.
I do not accept the submission that the objection should be disregarded in the circumstances of this case when considering the application for an abridgment and the declaration sought. In my opinion it is necessary for the Court to have regard to all relevant matters as at the date when the application is heard by the Court. The objection is relevant to the application. Indeed, it is a most important consideration because it has the automatic effect unless cancelled, of further extending the period of the bankruptcy to a period of 8 years from the date of filing the statement of affairs. Of course, if there is no substance in the objection notified then it is open to the bankrupt to challenge the ground of objection as he has successfully done in relation to the first notice of objection.
In this matter I am not satisfied that the applicant has made out a case for abridgment of the period of time for discharge of the bankrupt. Nor do I consider it appropriate to make the declaration sought.
This application should be dismissed with costs and I so order.
I certify that this and
the preceding nine (9)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.
Associate:
Date: 14 July 1995
Counsel for Applicant: Miss A L Wardell
Solicitors for Applicant: Morrison & Teare (Victoria)
For Trustee: Mr G Pignone of Kemp Strang & Chippindall
Date of Hearing: 4 July 1995
Date Judgment Delivered: 14 July 1995
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