Rimanic and Inspector-General in Bankruptcy
[2010] AATA 875
•9 November 2010
CATCHWORDS – BANKRUPTCY – trustee’s objection to discharge of bankruptcy – special ground - failure of bankrupt to provide written information as required by trustee for contribution assessment period – whether power to cancel objection – decision affirmed.
PRACTICE AND PROCEDURE – no burden of proof on bankrupt other than in relation to establishing that had a reasonable excuse for the conduct or failure that constituted the special ground.
Bankruptcy Act 1966, ss 80(1), 139K, 139L, 139L(1), 139M, 139P(1), 139S, 139T, 139U, 139U(1), 139U(1)(b), 139U(2), 139U(3), 139V, 139W(1), 139W(2), 139W(4), 139WA, 139X, 139X(1), 139X(2), 139Y(1), 139Y(2), 139Z(1), 149, 149B, 149B(1), 149B(2), 149C(1), 149C(1A), 149D, 149D(1)(d) and (e), 149G, 149H(1), 149H(3), 149H(4), 149J(1), 149J(3), 149K, 149N, 149N(1A), 149N(2), 149N(3), 149Q(a)
and (b)
Acts Interpretation Act 1901, ss 28A and 29
Administrative Appeals Tribunal Act 1975, s 43
Evidence Act 1995, s 160
Veterans’ Entitlements Act 1986, s 120(4)
McDonald v Director-General of Social Security (1984) 6 ALD 6
Repatriation Commission v Smith (1987) 74 ALR 537; 15 FCR 327; 12 ALD 798; 7 AAR 17
Re Caruana and Inspector-General in Bankruptcy [2008] AATA 307
Re D’Souza and Inspector-General in Bankruptcy [2010] AATA 708
Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 48 AAR 345; 103 ALD 467; 82 ALJR 1147
DECISION AND REASONS FOR DECISION [2010] AATA 875
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2009/4754
GENERAL ADMINISTRATIVE DIVISION )
Re:MICHAEL RIMANIC
Applicant
And:INSPECTOR-GENERAL IN BANKRUPTCY
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Place: Melbourne
Date: 9 November 2010
Decision:The Tribunal decides to affirm the decision of the respondent dated
9 September 2009 confirming the trustee’s objection dated 14 May 2009 to the applicant’s discharge from bankruptcy.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 20 April 2006, Mr Michael Rimanic became a bankrupt as a result of a sequestration order made against his estate under the Bankruptcy Act 1966 (Bankruptcy Act). Mr Stirling Horne was appointed to act as the trustee of the bankrupt estate. Unless the trustee makes an objection and that objection has taken effect, a bankrupt is discharged at the end of the period specified in s 149 of the Bankruptcy Act. On 14 May 2009, Mr Horne filed with the Official Receiver a Notice of Objection to Mr Rimanic’s discharge from bankruptcy.[1] He specified two grounds: ss 149D(1)(d) and (e). The Notice of Objection has taken effect and has led to the extension of Mr Rimanic’s bankruptcy from 17 May 2009 until 17 May 2014. The Inspector-General in Bankruptcy (Inspector-General) confirmed that Notice of Objection to Discharge in respect of the ground specified in s 149D(1)(d) but not in respect of s 149D(1)(e). As one ground remains, the Notice of Objection continues to have effect to extend Mr Rimanic’s bankruptcy.
[1] Bankruptcy Act, s 149B
I have decided to affirm the decision of the Inspector-General dated
9 September 2009 confirming the trustee’s objection dated 14 May 2009 to
Mr Rimanic’s discharge from bankruptcy.
BACKGROUND
In this section of my reasons, I have set out the findings of fact that I have made regarding sequence of events that form the background to the issues I must consider. I have made those findings on the basis of the evidence to which I have referred. The content of the letters is set out further in the footnotes:
| Date | Action on behalf of Mr Horne | Action by or on behalf of Mr Rimanic |
| 02/04/07 | Mr Horne issues Certificate of Assessment of Income and Contributions under s 139W(4) of Bankruptcy Act.[2] | |
| January 2008 | Mrs Rimanic sells house in which she and Mr Rimanic had lived. They move to another address. | |
| January 2008 | Mr Rimanic does not advise trustee of change of address as required by | |
| 03/03/08 | Letter to Mr Rimanic at incorrect address[4] advising he is required to assess income during a contribution assessment period (CAP) from 20 April 2007 to 19 April 2008 and determine if required to make contributions of income. Attaches Statement of Income (SI) for completion and return and requests specified information as evidence of income. The letter did not specify a time by which the information had to be returned to Mr Horne.[5] | Mr Rimanic did not receive the letter.[6] |
| 16/04/08 | Letter to Mr Rimanic at incorrect address enclosing copy of previous letter and requiring SI “together with any documents evidencing the derivation of that income …”. The letter stated that, if the information had not been given within 14 days, Mr Horne would have no alternative but to lodge an objection to discharge from bankruptcy.[7] | Mr Rimanic did not receive the letter.[8] |
| 15/01/09 | Letter to Mr Rimanic at incorrect address enclosing copies of two previous letters and an SI for the CAP from 20 April 2008 to 19 April 2009 and noting that he had not returned SI for CAP from 20 April 2007 to 19 April 2008 together with the specified information as before. It told Mr Rimanic he was required to “complete both attached Statements and return them to this office within 21 days of the date of this letter.”[9] | |
| 23/02/09 | Staff member telephoned Mr Rimanic to ask if he had received documents sent in three letters. | Mr Rimanic said that he had not, advised of new home address and asked that documents be sent again.[10] |
| 25/02/09 | Letter sent to Mr Rimanic attaching copies of letters dated 03/03/08 and 16/04/08 and requiring him to complete and return the SI relating to the CAP from 20 April 2007 to | |
| 06/03/09 | Mr Rimanic returns SI for CAP from 20 April 2008 to 19 April 2009.[12] | |
| 11/03/09 | Staff member from Mr Horne’s office telephoned | |
| 11/03/09 | Mr Rimanic telephoned Mr Horne’s office and told SI for CAP from | |
| 13/03/09 | Staff member from Mr Horne’s office telephoned In response to a further request for documentation relating to Mrs Rimanic, Mr Rimanic said that he would discuss it with his wife.[15] | |
| 17/03/09 | Letter to Mr Rimanic acknowledging receipt of SI for CAP from 20 April 2008 to 19 April 2009 and stating: “You stated in the Statement of Income that you are unemployed and your wife is supporting you financially. You have not provided any documentation to confirm your claim. In order for me to complete my assessment, you are required to provide me with copies of: · Your wife’s tax returns for the past three financial years and, · Bank statements for bank accounts in the name of your wife and/or jointly of you and your wife for the period after 6th October 2006. Your written reply within fourteen (14) days of the date of this letter is required.”[16] | |
| 25/03/09 | Mr Rimanic telephoned Mr Horne’s office regarding the letter of 17 March 2009. He said that he did not think that his wife would provide the documentation. When told that the trustee would take legal action, he replied that the trustee should do whatever he wanted to do. The staff member told Mr Rimanic that he needed to provide supporting documentation to show how he is living.[17] | |
| 14/05/09 | Under s 149B of the Bankruptcy Act, Mr Horne gives Notice of Objection to Discharge of Mr Rimanic from bankruptcy. The grounds of objection were those in | |
| 14/05/09 | Details of Notice of Objection entered in National Personal Insolvency Index and takes effect.[20] | |
| 17/05/09 | Date on which Mr Rimanic would have been discharged had Notice of Objection not been lodged.[21] | |
| 02/06/09 | Mr Rimanic’s solicitors wrote to | |
[2] T documents at 69 and see T documents at 41-42
[3] “If during a bankruptcy a change occurs in the bankrupt’s name or in the address of the bankrupt’s principal place of residence, the bankrupt must immediately tell the trustee in writing of the change.”
[4] The address referred to “Epro Street”. Mr Rimanic had previously lived in “Edro Street” at the number and suburb shown in the address used by Mr Horne.
[6] I make that finding on the basis of Mr Rimanic’s evidence in light of the incorrect address shown on the letter.
[7] T documents at 27
[8] See footnote above.
[9] T documents at 17
[10] T documents at 64
[11] T documents at 28-29
[12] Referred to at T documents 30 and see T documents 31-37
[13] T documents at 66
[14] T documents at 65
[15] T documents at 67
[16] T documents at 30
[17] T documents at 68
[18] T documents at 41-42
[19] s 149A(2)(i)
[20] s 149G
[21] s 149(4): the end of the period that is three years from the date on which Mr Rimanic filed his Statement of Affairs.
[22] T documents at 43
LEGISLATIVE BACKGROUND
The form of the objection and the grounds on which it may be made
At any time before a bankrupt is discharged from bankruptcy, a trustee may file with the Official Receiver a written notice of objection to a discharge.[23] The trustee must do so if he or she believes:
“(a) that doing so will help make the bankrupt discharge a duty that the bankrupt has not discharged; and
(b)that there is no other way for the trustee to induce the bankrupt to discharge any duties that the bankrupt has not discharged.”[24]
[23] s 149B(1)
[24] s 149B(2)
The notice of objection must set out each of the grounds of objection, refer to the evidence or other material that, in the trustee’s opinion, establishes each ground and, except in relation to the grounds specified in s 149C(1A), states the trustee’s reasons for objecting on those grounds.[25] The grounds of objection are set out in s 149D. Mr Horne relied on ss 149D(1)(d) and (e) but the Inspector-General
confirmed his decision only in respect of the former. That ground is that:
“(d) the bankrupt, when requested in writing by the trustee to provide written information about the bankrupt’s property, income or expected income, failed to comply with the request;”
[25] s 149C(1)
Trustee’s power to require disclosure of information
Section 139U(1) provides:
“A bankrupt must, as soon as practicable, and in any event not later than 21 days, after the end of a contribution assessment period, give to the trustee:
(a) a statement:
(i) setting out particulars of all the income that was derived by the bankrupt during that contribution assessment period; and
(ia) setting out particulars of all the income that was derived by each dependant of the bankrupt during that contribution assessment period; and
(ii) indicating what income (if any) the bankrupt expects to derive during the next contribution assessment period; and
(iii) indicating what income (if any) the bankrupt expects each dependant of the bankrupt to derive during the next contribution assessment period; and
(b) such books evidencing the derivation of the income referred to in subparagraph (a)(i) as are in the possession of the bankrupt or the bankrupt can readily obtain.
…”
The particulars that a bankrupt is required to include in the statement given under s 139U(1)(a)(i) and (ia) “… are all the particulars that are known to the bankrupt and any particulars that the bankrupt can readily obtain.”[26]
[26] s 139U(2)
Section 139U(3) provides guidance on the types of books that a bankrupt is required to give the trustee under s 139U(1)(b) in respect of a CAP:
“Without limiting the generality of paragraph (1)(b), the books that a bankrupt is required to give to the trustee under that paragraph in respect of a contribution assessment period include:
(a) if the bankrupt received from his or her employer one or more pay slips or other documents evidencing salary or wages paid to him or her by that employer during that period—that document or each of those documents; and
(b) any copy of a group certificate or payment summary (within the meaning of section 16-170 in Schedule 1 to the Taxation Administration Act 1953) in the possession of the bankrupt that relates in whole or in part to that period; and
(c) any statement provided to the bankrupt by an ADI or other financial institution that shows periodic payments made during that period to an account kept by the bankrupt (either alone or jointly with any other person) with that institution; and
(d) any notice of assessment issued to the bankrupt under the Income Tax Assessment Act 1936 in respect of a year of income in which that period is included; and
(e) if the bankrupt is in receipt of a pension, allowance or other benefit under a law of the Commonwealth, of a State or of a Territory—any letter or other document sent or given to the bankrupt by the Department or authority that administers the legislation or scheme under which the benefit is provided.”
A trustee may require a bankrupt to provide additional material if circumstances justify the use of s 139V. That section provides:
“If the trustee has reasonable grounds to suspect that:
(a) any particulars set out in the statement given by the bankrupt under subsection 139U(1) are false or misleading in a material respect; or
(b) any material particulars have been omitted from that statement;
then, for the purpose of enabling the trustee to decide whether the particulars set out in the statement are correct, the trustee, by written notice given to the bankrupt, may require the bankrupt to give to the trustee within a specified period of not less than 14 days such information or books as are specified in the notice.”
Relevance of information to assessment of contributions required of a bankrupt
The information that the trustee obtains from a bankrupt by using these powers is relevant in assessing the contributions that the particular bankrupt, who derives income during the bankruptcy, must pay towards his or her bankrupt estate. It may also be relevant in enabling the trustee to recover money and property for the benefit of that estate. In respect of the former:
“Subject to section 139Q, if the income that a bankrupt is likely to derive during a contribution assessment period as assessed by the trustee under an original assessment exceeds the actual income threshold amount applicable in relation to the bankrupt when that assessment is made, the bankrupt is liable to pay to the trustee a contribution in respect of that period.”[27]
[27] s 139P(1)
When making an assessment of the income that was “likely to be derived, or was derived, by the bankrupt …”[28] during a CAP, the trustee has regard to the information that the bankrupt has provided in response to the demands made under ss 139U and 139V. The trustee may also have regard to any other information that may be in his or her possession.[29] If the trustee considers that the information provided by the bankrupt is, or may be, incorrect, the trustee may disregard that information and make an assessment on the basis of what he or she considers to be the correct information.[30]
[28] s 139W(1)
[29] s 139X(1)
[30] s 139X(2)
The trustee is not limited to the information disclosed by the bankrupt. Section 139Y(1) deals with a bankrupt who is employed or who has engaged during a CAP in “work or in activities that resemble employment or other work” and who did not receive remuneration or who received remuneration that is less than what, in summary, might reasonably be expected to have been received in respect of that employment or work or those activities. For the purposes of making an assessment in respect of that bankrupt, the trustee may determine that reasonable remuneration was received for the employment, work or activities.[31] Section 139Y(2) is concerned with a bankrupt who, during a CAP enters a transaction that might reasonably be expected to produce, or to have produced, income and either derives none or derives less than what might reasonably have been expected if the transaction had been entered at arm’s length. If that is the case, the trustee may determine that the bankrupt derives or derived reasonable income from the transaction.
[31] s 139Y(1)
If a bankrupt does not provide information about whether he or she has derived, or is likely to derive, income or income of a particular class or claims not to have derived, or be likely to derive, income or income of a particular class during a CAP, the trustee must first make a decision under s 139Z(1). That decision is whether he or she has reasonable grounds for believing that the bankrupt has derived, or is likely to derive, income or income of that class during the CAP. If the trustee forms that belief, he or she may determine that the bankrupt is likely to derive, or derived, income or income of that class during that period. The trustee may also determine the amount of that income.
Having made an assessment, the trustee may make a fresh assessment if satisfied of the changes to the bankrupt’s circumstances specified in s 139W(2). There is no time limit on the trustee’s making either an assessment or a fresh assessment for a CAP and the trustee may do so after the end of the CAP or after the bankrupt has been discharged.[32]
[32] s 139WA
Subject to qualifications relating to cases of hardship,[33] an amount known as the Actual income threshold amount is deducted from the bankrupt’s assessed income and the remaining figure divided by two. Provided it is a positive, and not a negative, amount, the amount that remains is the contribution that the bankrupt must make in respect of a particular CAP.[34] The liability to make any contribution that has been assessed remains even after discharge.[35]
[33] s 139T
[34] s 139S and see also ss 139P and 139Q
[35] s 139R
What is meant by “income”?
Section 139U falls within Division 4B of Part VI. That Division is entitled “Contribution by bankrupt and recovery of property”. For the purposes of that Division, the word “income” is defined in s 139L.[36] In so far as that provision is relevant, the word:
[36] s 139K
“… income, in relation to a bankrupt, has its ordinary meaning, subject to the following qualifications:
(a) the following are income in relation to a bankrupt (whether or not they come within the ordinary meaning of “income”):
(i) an annuity or pension paid to the bankrupt from a provident, benefit, superannuation, retirement or approved deposit fund;
(ia) an annuity or pension paid to the bankrupt from an RSA;
(ii) a payment to the bankrupt in consequence of a termination of any office or employment;
(iii) an amount of annuity or pension received by the bankrupt under a policy of life insurance or endowment insurance;
(iv)an amount received by the bankrupt as a beneficiary under a trust to the extent that the amount was paid out of income of the trust;
(v) the value of a benefit that:
(A) is provided in any circumstances by any person (the provider) to the bankrupt; and
(B) is a benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 as in force at the beginning of 1 July 1992 (other than a benefit that would be an exempt benefit for the purposes of that Act if the provider were the employer of the bankrupt as an employee and the provider had provided the benefit in respect of the employment of the bankrupt);
being that value as worked out in accordance with the provisions of that Act but subject to any modifications of any provisions of that Act made by the regulations under this Act;
(vi)the value of a loan made to the bankrupt by an associated entity of the bankrupt, including:
(A) a loan under which the loan money is not paid to the bankrupt, but is paid or applied at the bankrupt’s direction; and
(B) a loan that is not enforceable at law or in equity;
(vii) the amount of any money, or the value of any other consideration, received by a person other than the bankrupt from another person as a result of work done or services performed by the bankrupt, less any expenses (other than expenses of a capital nature) necessarily incurred by the first-mentioned person in connection with the work or services;
(b) the following are not income in relation to a bankrupt (even if they come within the ordinary meaning of “income”):
(i) an amount paid to the bankrupt:
(A) from the Child Support Account established under the Child Support (Registration and Collection) Act 1988; or
(B) from another source for the maintenance of children of whom the bankrupt has custody; or
(iv) a payment to the bankrupt under:
(A) a legal aid scheme or service established under a law of the Commonwealth or of a State or Territory of the Commonwealth; or
(B) a legal aid scheme or service approved by the Attorney-General for the purposes of paragraph 2(4)(a) of the Federal Court of Australia Regulations; or
(C) any other legal aid scheme or service established to provide assistance to people on low incomes;
(v) a payment or amount that the regulations provide is not income of the bankrupt.
pension includes a pension within the meaning of the Superannuation Industry (Supervision) Act 1993.”[37]
[37] s 139L(1)
Section 139M relates to the derivation of income. It provides:
“(1) Income is taken to be derived by a bankrupt for the purposes of this Division even though it is not actually received by the bankrupt because:
(a) an amount is deducted from it, or it is wholly or partly otherwise applied, under a law of the Commonwealth, of a State or of a Territory; or
(b) it is reinvested, accumulated or capitalised; or
(c) it is dealt with on behalf of the bankrupt or as the bankrupt directs.
(2) A reference in this Division to the income that a bankrupt is likely to derive during a contribution assessment period includes a reference to income that the bankrupt has derived during that period.
(3) A reference in this Division to income derived by a bankrupt during a contribution assessment period includes a reference to income so derived in respect of work done or services performed by the bankrupt before that period or work to be done or services to be performed by the bankrupt after that period.”
The cessation of an objection on a particular ground or grounds
If, before a bankrupt is discharged from bankruptcy, the trustee ceases to object on a particular ground, he or she must give the Official Receiver a notice specifying that ground and give the bankrupt a copy of the notice.[38] If any other ground or grounds remain, the trustee’s objection continues to have effect on those other grounds.[39] Once the trustee ceases to object on the final remaining ground or grounds, and details of the trustee’s notice to the Official Receiver of that fact is entered on the National Personal Insolvency Index, the objection ceases to have effect.[40]
[38] s 149H(1)
[39] s 149H(4)
[40] s 149H(3)
The trustee may withdraw an objection at any time before a bankrupt is discharged from bankruptcy. He or she must give both the bankrupt and the Official Receiver a notice of the withdrawal.[41] The withdrawal takes effect when the details of the notice are entered on the National Personal Insolvency Index.[42]
[41] s 149J(1)
[42] s 149J(3)
Review of objection
Section 149K provides for the internal review of an objection by the Inspector-General. The powers of the Inspector-General on review of a decision are set out in s 149N. That section provides:
“(1) On review of a decision, if the Inspector-General is satisfied that:
(a)the ground or grounds on which the objection was made was not a ground or were not grounds specified in subsection 149D(1); or
(b)there is insufficient evidence to support the existence of the ground or grounds of objection; 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 or those grounds, or the grounds that included that ground or those grounds, was cancelled;
the Inspector-General must cancel the objection.”
Should the Inspector-General be satisfied of these matters, the cancellation takes effect at the time specified in s 149N(2). If not satisfied, the Inspector-General must confirm the decision.[43]
[43] s 149N(3)
The Inspector-General must not cancel an objection if the circumstances in s 149N(1A) exist. That section provides:
“An objection must not be cancelled under subsection (1) if:
(a)the objection specifies at least one special ground; and
(b)there is sufficient evidence to support the existence of at least one special ground specified in the objection; and
(c)the bankrupt fails to establish that the bankrupt had a reasonable excuse for the conduct or failure that constituted the special ground.
…”
The expression “special ground” means “… a ground specified in paragraph 149D(1)(ab), (d), (da), (e), (f), (g), (h), (ha), (k) or (ma).”[44] In applying s 149N(1A), “… no notice is to be taken of any conduct of the bankrupt after the time when the ground concerned first commenced to exist.”[45]
[44] s 149N(1A)
[45] s 149N(1B). In light of the express provision in s 149N(1B), the principles expressed in Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 48 AAR 345; 103 ALD 467; 82 ALJR 1147 have no application.
The Tribunal may review a decision of the Inspector-General made on review of a trustee’s decision to file a Notice of Objection.[46]
CONSIDERATION
[46] s 149Q(a). The Tribunal may also review a decision by the Inspector-General refusing to review the trustee’s decision: s 149Q(b).
The structure of s 149N
The Tribunal is required to review the decision of the Inspector-General. The Inspector-General’s powers on review are more limited than those of the trustee who filed the Notice of Objection. Unless the trustee believes that filing a Notice of Objection will help make the bankrupt discharge a duty that has not been discharged and there is no other way to induce the bankrupt to discharge that duty, the trustee has a discretion whether or not to file a Notice of Objection provided there is a ground of objection under s 149D. That is apparent from s 149B(1) which provides that the trustee “may” file with the Official Receiver a Notice of Objection to the discharge. Although it may be otherwise in some contexts, the word “may” is generally “used to express permission”[47] rather than an obligation. Parliament’s choice of the word “may” in this provision may be contrasted with its use of the word “must” in other provisions such as ss 149C(1) and 149N(1). In light of such provisions, it seems to me that its choice of the word “may” is intended to convey permission and so confer a discretion upon the trustee whether or not to file a Notice of Objection. If the trustee holds the relevant belief, the trustee has no discretion and must file the notice. That is the outcome of s 149B(2) of the Bankruptcy Act.
[47] Chambers 21st Century Dictionary, revised edition, 1999, Chambers
To the extent that s 149N(1) sets out the circumstances in which the Inspector-General must cancel the objection, it is entirely consistent with the powers conferred on the trustee. If one or more of those circumstances exists, the trustee would not have had the power to file a Notice of Objection and the exercise of any discretion would not have been a relevant consideration.
If none of those circumstances exists, the difference between the powers of the Inspector-General and of the trustee becomes apparent. If the contrary of one or more of the circumstances in s 149N(1) prevailed at the relevant time, a trustee would have had the power to file the Notice of Objection. Subject to the provisions of s 149B(2), it would have been a matter for his or her discretion. If, in the case of a ground that is not a special ground, the Inspector-General is not satisfied that one or more of the circumstances in s 149N(1) is the case, the Inspector-General must confirm the objection. The Inspector-General has no discretion. That is the outcome of the application of s 149N(3).
The inter-relationship between ss 149N(1) and 149N(1A)
Section 149N(1A) deals with the situation in which a Notice of Objection specifies at least one special ground and there is sufficient evidence to support the existence of at least one of those special grounds. If, in addition to those two circumstances prevailing, the bankrupt fails to establish that he or she had a reasonable excuse for the conduct or failure that constituted the ground, the Inspector-General must not cancel the objection. The trustee would have had a discretion but the Inspector-General has none. The practical effect of s 149N(1A) is to restrict further the operation of s 149N(1) and the cancellation power it confers when the objection is made on a special ground.
The inter-relationship between ss 149N(1) and (1A) and the way in which they apply in practice has caused me some difficulty. It seems to me that the correct approach is to look at each ground specified in the Notice of Objection in turn
and:
(1)first decide whether I am satisfied that any of the circumstances in
s 149N(1)(a) to (d) prevails in relation to that ground;(2)if one or more does prevail in respect of a ground and that ground is not a special ground, the objection must be cancelled in respect of that ground under s 149N(1);
(3)if none of them prevails in respect of a ground, whether or not it is a special ground, the power to cancel (expressed in the form of an obligation to cancel) does not arise and the objection must be confirmed in respect of that ground under s 149N(3);[48] and
(4)if I am satisfied that one or more does prevail in respect of a ground that is a special ground, I must decide which of the circumstances in
s 149N(1) prevails:(a)if the circumstances in s 149N(1)(a) or (b) prevail in relation to that special ground, the objection must be cancelled;[49] and
(b)if the circumstances in ss 149N(1)(c) or (d)[50] prevail but those in s 149N(1)(a) or (b) do not, I must decide whether the bankrupt has failed to establish that he or she had a reasonable excuse for the conduct or failure that constituted the special ground;
(i)if I am satisfied that the bankrupt has established that he or she had a reasonable excuse for the conduct or failure that constituted the special ground, I must cancel the objection;[51] and
(ii)if I am satisfied that the bankrupt has failed to establish that he or she had that reasonable excuse, I must not cancel the objection.[52]
[48] Section 149N(1A) does not come into play to achieve this result in relation to a ground that is a special ground. If none of the circumstances in s 149N(1) prevails, there is simply no power to cancel that ground of objection. If the matter is looked at from the point of view of s 149N(1A), then s 149N(1A)(a) would be satisfied for the objection would have specified one ground that is a special ground. Section 149N(1A)(b) would be satisfied for a finding that the circumstances in s 149N(1)(b) do not prevail must also lead to a finding that there is sufficient evidence to support the existence of that special ground. If the bankrupt comes within s 149N(1A)(c) by failing to have a reasonable excuse for the conduct or failure that constituted the special ground, the objection must not be cancelled under s 149N(1). If the bankrupt does put forward a reasonable excuse for the conduct or failure that constituted the special ground, s 149N(1A) has no application for each of its three paragraphs must be satisfied. As none of the circumstances in s 149N(1) prevails, no power to cancel the objection is conferred on the Inspector-General or on this Tribunal.
[49] The provisions of s 149N(1A) do not apply for it will only apply if, among other criteria, the objection specifies at least one special ground and there is sufficient evidence to support the existence of that special ground. A finding of that sort would be at odds with my already being satisfied that the circumstances set out in s 149N(1)(b) prevail i.e. that there is insufficient evidence to support the existence of the special ground.
[50] As to the circumstances in ss 149N(1)(a) and (c), see Footnote 48 above.
[51] Once I am satisfied that the bankrupt has a reasonable excuse, s 149N(1A) has no application for all of its criteria, and not just one, must be established for it to take effect. Section 149N(1) must then be given its full effect and, as the circumstances in s 149N(1)(d) prevails, its full effect is to cancel the objection. It does not provide for the exercise of any discretion in the matter.
[52] That is so even though satisfaction that the circumstances in ss 149N(1)(a), (c) or (d), or two or three of them, prevail would lead to a cancellation of the objection on that ground had it not been a special ground.
I note that Senior Member Friedman has analysed the interplay among ss 149N(1), (1A) and (3) in Re Caruana and Inspector-General in Bankruptcy[53] when he said:
“In order to succeed in obtaining a cancellation of a special ground of objection Mr Caruana must show that at least one of the conditions in
s 149N(1) of the Act applies and that the circumstances in s 149N(1A) of the Act do not apply, otherwise the Tribunal must confirm the decision under
s 149N(3).”[54]
Putting aside the issue of a burden of proof, I think that this analysis has the attraction of brevity and, as a broad summary of the effect of s 149N, I agree with it.
[53] [2008] AATA 307
[54] [2008] AATA 307 at [13] and see also Senior Member Friedman’s decision in Re D’Souza and Inspector-General in Bankruptcy [2010] AATA 708 at [30]
In so far as Senior Member Friedman states that the bankrupt “must show that at least one of the conditions in s 149N(1) applies …”, I respectfully suggest that he is incorrect. His analysis suggests that there is a burden or onus of proof upon the bankrupt to establish that one or more of the circumstances specified in that provision prevails. There is no such burden of proof imposed by the provision itself or by the Bankruptcy Act in relation to that provision. This is in accordance with the general principles in s 43 of the Administrative Appeals Tribunal Act 1975 that the Tribunal is to put itself in the same position as the person making the decision under review. The general principles were set out in McDonald v Director-General of Social Security:[55]
“There is certainly no legal onus of proof arising from the fact that this is an ‘appeals’ tribunal, because the AAT is required, in effect, by s 43 of the AAT Act, to put itself in the position of the administrator in carrying out its review and, in the light of the material before the AAT, (not the material before the administrator, Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589) make its own decision in place of the administrator’s. The AAT itself, in a series of cases beginning with Re Ladybird Children’s Wear Pty Ltd (1976) 1 ALD 1, has taken the view that there is no presumption that the administrator's decision is correct. This is clearly the right approach to the matter.”[56]
[55] (1984) 6 ALD 6
[56] (1984) 6 ALD 6 at 10 per Woodward J
Woodward J went on to recognise that the general position could be altered by Parliament:
“It is possible to imagine a case where the Act which the administrator is applying places a requirement or onus on one or other of the parties to an issue to establish a particular state of facts on which the administrator’s decision would be based. If that were so, the same requirement or onus would apply before the AAT.”[57]
[57] (1984) 6 ALD 6 at 10 per Woodward J
Parliament has changed the general position in s 149N(1A)(c) for that paragraph clearly places the onus on the bankrupt “to establish” that he or she had a reasonable excuse. Failure to do so when ss 149N(1A)(a) and (b) have been established leads to the outcome specified in that section. There is no such burden placed on the bankrupt in relation to ss 149N(1A)(a) and (b) or in relation to
s 149N(1). All that is required in relation to s 149N(1) is that the Inspector-General, and so the Tribunal, is “satisfied”. That does not impose a burden of proof upon a party to the application. All that it does is indicate the standard to which the Inspector-General, and so the Tribunal, must be persuaded. In the absence of any statutory provision to the contrary, the standard of proof applicable in civil proceedings in the courts is that applicable in the Tribunal i.e. on the balance of probabilities. This is the conclusion reached by Beaumont J, with whom Northrop and Spender JJ agreed, in Repatriation Commission v Smith[58] when considering whether the Tribunal had decided a matter under s 120(4) of the Veterans’ Entitlements Act 1986 “to its reasonable satisfaction”. His Honour also noted that “There is … a distinction of substance to be drawn between the probabilities on the one hand and mere possibilities, even if they are real as distinct from fanciful, on the other …”.[59]
[58] (1987) 74 ALR 537; 15 FCR 327; 12 ALD 798; 7 AAR 17
[59] (1987) 74 ALR 537; 15 FCR 327; 12 ALD 798; 7 AAR 17 at 538; 335; 800; 26
Do any of the circumstances in s 149N(1) prevail?
The ground on which Mr Horne filed his Notice of Objection is a ground that is specified in s 149D being that specified in s 149D(1)(d). Therefore, I am not satisfied that s 149N(1)(a) has been met.
The next question arising from s 149N(1)(b) is whether there is insufficient evidence to support the existence of the ground of objection. It is apparent from the Notice of Objection that Mr Horne alleges that Mr Rimanic has failed, when requested in writing to do so, to provide written information in two separate ways:
(1)complete and return two separate SIs for two separate CAPs within
21 days of the date of the letter i.e. 25 February 2009; and(2)provide the information listed in the letter as evidence of the income received in the earlier CAP and likely to be derived in the latter.[60]
This was the information sought by Mr Horne in his letter dated 25 February 2009.[61] Mr Rimanic acknowledges that he received this letter.
[60] T documents at 28-29. The information requested in the letter is the same as that requested in the earlier letters; see FN 4 above.
[61] T documents at 28-29
Whether or not he received the earlier letters sent by or on behalf of
Mr Horne to an incorrect address is of no consequence. Mention was made during the hearing of the provisions of the Acts Interpretation Act 1901 (AI Act) but I do not consider that it is relevant. As there is nothing to the contrary in the Bankruptcy Act, s 28A of the AI Act authorises the trustee to give Mr Rimanic the request by sending it to him by pre-paid post to, the address of his place of residence or business of the person as last known to the person serving the document. If it is sent in that way, the effect of s 29 is that, unless the contrary is proved, it is presumed to have been effected at the time at which the letter would have been delivered in the ordinary course of post. In the absence of evidence to the contrary, s 160 of the Evidence Act 1995 provides that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the fourth working day after having been posted.
These provisions do not apply in this case because Mr Horne did not send the request in his earlier letters to the address that Mr Rimanic had given him and that was known to him. Instead, there was a spelling error in the address and it was an incorrect address.
Mr Rimanic said that only one SI was enclosed with the letter dated
25 February that he did receive. That was for the CAP from 20 April 2008 to
19 April 2009. He did not receive the SI for the CAP from 20 April 2007 to 19 April 2008. I do not doubt that this is his memory of events but I do not accept that his memory is accurate.
There are several matters that lead me to make that finding. The statement that the relevant SI is enclosed in the letter is one matter although it is not determinative. Errors do occur. If that error had occurred, I would have expected to see some reference to the fact of its being omitted when Mr Rimanic telephoned
Mr Horne’s office on 11 March 2009[62] for the letter clearly stated that it was enclosed. Instead, the notes of the conversation refer first to Mr Rimanic’s saying that he had returned the SI for that earlier CAP and then to his saying that he would fax it. They do not refer to its not being enclosed in the letter at all. When Mr Horne’s staff member telephoned Mr Rimanic later in the day to advise that the SI for the earlier period had not been received, he is noted as saying that he thought he had returned both SIs.[63] The staff member’s further telephone call to Mr Rimanic on 13 March 2009 led to Mr Rimanic’s repeating that he would check his home for the SI. The conversation moved to the supporting document[64] as did their conversation on25 March 2009.[65] These matters lead me to conclude that, on the balance of probabilities, the SI was enclosed in the letter of 25 February 2009.[62] T documents at 65
[63] T documents at 66
[64] T documents at 67
[65] T documents at 68
Having decided that the SI for the CAP from 20 April 2007 to 19 April 2008 was enclosed in that letter, I am also satisfied that Mr Rimanic did not return it to Mr Horne as required. Although he returned it on 2 June 2009, he was well beyond the period of 21 days specified in the letter dated 25 February 2009.
The SI for that CAP takes the form of a series of questions. Blank boxes appear next to or after each question and Mr Rimanic was required to answer the question by providing the appropriate information in the relevant box. The questions asked in the SI ranged over a number of topics including whether he derived income from his occupation or any other employment, income from funds such as superannuation funds and annuities, income from family trusts and income from interest on term deposits management and savings accounts. Income of this sort is clearly income within the ordinary meaning of that word and so within the definition in s 139L of the Bankruptcy Act. Mr Horne made a written request for written information about them. By not returning the SI within time and certainly before
Mr Horne filed his Notice of Objection, Mr Rimanic failed to comply with the request within the meaning of s 149D(1)(d). It does not matter whether his answers were that he was not receiving any income of the kind specified in the SI, he failed to provide written information to that effect.[66][66] Had Mr Rimanic returned the SI, it would have become relevant to consider whether he failed to comply with the request to provide information in the form of the documents sought when he claimed that he had no income and could not obtain documents from his wife. In view of the finding I have made, I do not need to consider that issue and do not.
That means that there is sufficient evidence to support the existence of the ground of objection set out in the Notice of Objection i.e. the ground under
s 149D(1)(d). Therefore, the circumstances set out in s 149N(1)(b) do not prevail.
Do those in s 149N(1)(c) prevail? In the context of this case, that requires that I be satisfied that the reasons given by the trustee for objecting on the ground specified in s 149D(1)(d) do not justify the making of the objection. That requires me to look to s 149C(1)(c), which provides that the Notice of Objection must state the trustee’s reasons for objecting to the discharge on that ground, but also to
s 149C(1A). That latter provision stipulates that “paragraph (1)(b) does not apply to a ground specified in paragraph 149D(1)… (d) …”.
Section 149C(1A) is the provision to which Mr Horne referred at the conclusion of his Notice of Objection under the heading of “Reasons for objecting”. They read:
“Reasons of the Trustee objecting do not apply pursuant to section 149C(1A) of the Act.
As a consequence of extending the bankruptcy the bankrupt may be induced to provide explanations and further information about his affairs.”[67]
[67] T documents at 42
As s 149C(1A) removes the obligation to give reasons in relation to a ground specified in, among others, s 149D(1)(d), I am satisfied by Mr Horne’s reference to s 149C(1A) that his reasons justify his making the objection on that ground. That is enough and the circumstances in s 149N(1)(c) do not prevail.
Those in s 149N(1)(d) do not prevail for I have no evidence on which I am satisfied that a previous objection has been made on the ground specified in
s 149D(1)(d), or on grounds that included that ground.
As none of the circumstances in s 149N(1) prevails, there is no basis on which the Inspector-General, and so I, must (or may) cancel the objection on the ground specified in s 149D(1)(d).
What of s 149N(1A)?
Having reached this conclusion, s 149N(1A) has no role to play. Even if I were to find that Mr Rimanic had a reasonable excuse for failing to comply with Mr Horne’s request for information, I would have no basis on which to cancel the objection under s 149N(1). I have found that none of the conditions specified in that provision applies in this case. As I have no power to cancel the objection, I must confirm it under s 149N(3).
Decision
For the reasons I have given, I affirm the decision of the Inspector-General dated 9 September 2009 confirming the trustee’s objection dated 14 May 2009 to Mr Rimanic’s discharge from bankruptcy.
I certify that the preceding forty seven paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ....................................................................
Leah Berardi Associate
Date of Hearing 21 October 2010
Date of Decision 9 November 2010
Counsel for the Applicant Mr Tim Bourke
Solicitor for the Applicant Mr Christopher Bunnett,
Christopher Bunnett Lawyers
Solicitor for the Respondent Mr Joe Giacco,
Australian Government Solicitor
“In order to make an accurate assessment of your income you are required to provide me with details of income derived for the previous CAP and estimate your amount of gross income expected to be derived for the contribution assessment period 20th April 2007 to 19th April 2008. The following information must be provided as evidence of income:
1.Pay slips or documents evidencing salary or wages;
2.Any group certificate or tax stamp sheet;
3.Bank statemnts;
4.Notice of Income Tax Assessment;
5.Any letter or other document sent or given to you by the Department of Social Security
6.Details of benefits including the following:
(a)Provision of a motor vehicle for private use
(b)Debt waiver
(c)The taxable values of free or low interest loans
(d)Payment of expenses on your behalf
(e)The provision of free or low cost housing
(f)The provision of discounted air travel
…” (T documents at 16)
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