Romeo and Inspector-General in Bankruptcy
[2016] AATA 446
•29 June 2016
Romeo and Inspector-General in Bankruptcy [2016] AATA 446 (29 June 2016)
Division
Taxation & Commercial Division
File Number(s)
2015/1365
Re
Anna Maria Romeo
APPLICANT
And
Inspector-General in Bankruptcy
RESPONDENT
DECISION
Tribunal Deputy President S E Frost
Date 29 June 2016 Place Sydney The decision under review is set aside. The objection to the Applicant’s discharge from bankruptcy is cancelled.
........................[sgd]................................................
Deputy President S E Frost
CATCHWORDS
BANKRUPTCY – objection to discharge from bankruptcy - extension of term of bankruptcy – special ground - failure to respond to requests for information – whether extension can be cancelled – whether applicant had reasonable excuse for failing to provide information – applicant suffering from severe anxiety and depression at time of requests - decision set aside
LEGISLATION
Bankruptcy Act 1966 ss 149D(1)(d), 149N(1A), 149N(1B)
REASONS FOR DECISION
Deputy President S E Frost
29 June 2016
INTRODUCTION
The Applicant, Anna Maria Romeo, is a bankrupt.
In the ordinary course of events she would have been discharged from bankruptcy after a period of three years, in December 2014. However, the period of her bankruptcy has been extended to eight years because of her failure to respond to requests for information from her trustee in bankruptcy, Christopher Chamberlain. She has applied to the Tribunal to see whether the extension to her period of bankruptcy can be cancelled.
THE LEGISLATION AND ISSUES IN DISPUTE
The relevant legislation is the Bankruptcy Act 1966 (the Act), and specifically Division 2 of the Act.
The ground relied on by the Respondent to extend the Applicant’s period of bankruptcy is the ground set out in s 149D(1)(d) of the Act – that, when requested in writing by the trustee to provide written information about her property, income or expected income, she had failed to comply with the request. The trustee had initially objected to the discharge from bankruptcy on two further grounds but they were not upheld on internal review.
Section 149N(1A) of the Act provides that the particular ground relied on by the Respondent is a ‘special ground’. As far as relevant to the current application, an objection to discharge on a ‘special ground’ must not be cancelled if:
·there is sufficient evidence to support the existence of that ground (s 149N(1A)(b)); and
·the Applicant fails to establish that she had a reasonable excuse for the conduct or failure that constituted that ground (s 149N(1A)(c)).
Section 149N(1B) further provides that ‘[i]n applying subsection (1A), no notice is to be taken of any conduct of the bankrupt after the time when the ground concerned first commenced to exist’.
There is no doubt that there is sufficient evidence to support the existence of the special ground in s 149D(1)(d). That evidence is to be found in:
·the letter dated 21 August 2012 from the trustee to the Applicant (T15-261);
·a second letter, dated 26 September 2012 from the trustee to the Applicant (T15-262);
·the statutory declaration made on 7 December 2012 by Frank Hoare, a licensed process server, confirming personal service on the Applicant, on 20 October 2012, of the trustee’s letters dated 21 August 2012 and 26 September 2012 (T15-266); and
·the Applicant’s acknowledgement of her failure to respond to the trustee’s letters (Exhibit A3 at [2]).
The question is whether the Applicant can ‘establish that she had a reasonable excuse for’ failing to respond to the trustee’s requests for information.
THE APPLICANT’S CASE
The Applicant’s case is that she failed to respond to the trustee’s requests for information because she was suffering from a high degree of anxiety and an inability to cope with the circumstances that had befallen her.
She supports her case with some reports from a psychotherapist at Manly Counselling Service, a statement from her general practitioner and an oral outline of the circumstances leading up to and after her bankruptcy.
It is appropriate to set out the background facts so as to place the Applicant’s case into some context.
The Applicant’s bankruptcy came about when, as a consequence of the global financial crisis in 2008, she and her husband were unable to meet loan repayment obligations owed to her brother. That default had a grave impact on the Applicant’s extended family, which the Applicant described up to that point as ‘very close’.
Earlier in 2008 the Applicant’s husband had been diagnosed with cancer. That diagnosis eventually led to surgery followed by radiation and hormone therapy.
The Applicant’s mother died on 26 November 2011. The Applicant described this as a major event in her life. The funeral was on 3 December 2011. Between those two dates the Applicant was required, in connection with her bankruptcy, to submit her statement of affairs to the Official Receiver. It was around this time, according to the Applicant, that ‘the whole family fell apart’. The Applicant felt isolated from the rest of her family because she felt unable to attend family gatherings whenever her brother was present.
There were other events happening in the Applicant’s life at the time. She said she was subjected to harassment but she did not know where it came from. She said she wanted to comply with everything that was required of her but she was unable to. She could not go to the letterbox but had to send her grandchildren to check the mail because she was getting ‘dead rats and other material’ in the letterbox. She could not always cope with opening the mail. Under cross-examination she said:
I couldn’t cope with looking at any paperwork with the Chamberlain name on it simply because my first encounter with Mr Chamberlain was when he confronted me a week after my mother passed away, at my workplace, unexpectedly turned up … and I cried and cried. I could not even cope with him turning up at that time to question me. … I felt very intimidated by him. … I could not deal with this thing …
Some time later she was forced to move out of her house into an apartment. She had ‘detached’ herself from her family and no-one except her daughter, her son and her grandchildren knew where she was living, but two weeks after moving she found letters in her letterbox saying ‘Mary’s gone crackers’. Even now the Applicant says she is ‘petrified’ of being stalked.
Whether these things were happening in the way she described is irrelevant. What is relevant is that this was the Applicant’s perception of the way things were. I accept that she genuinely perceived things that way.
In a written report dated 20 February 2014 Elspeth Hawkins, a psychotherapist at Manly Counselling Service, states[1]:
Since 2008 she has suffered from extreme anxiety resulting from her financial crisis and serious emotional abuse from certain family members. Until this time Mrs Romeo had been the Matriarch of a large family, who had always turned to her for emotional and financial support.
Currently Mrs Romeo is suffering from a serious biochemical depression requiring antidepressant medication and continuing supportive psychotherapy.
[1] Exhibit A3, page 19
Dr George Quittner, the Applicant’s general practitioner, provided a report dated 3 December 2015 in which he states[2]:
Mrs Romeo has suffered with a major depressive illness largely as a result of her husband’s diagnosis with cancer, a financial disaster in their family business and major conflict with members of her family. I understand she was deeply affected by her mother’s death on 26/11/11. She was forced into bankruptcy by her brother. I am advised the Police had to be called to deal with physical and mental abuse by her brother.
This clinical diagnosis of biological depression has been independently confirmed by a qualified psychologist. She was described by the psychologist as ‘robotic’ and cognitively impaired.
Mrs Romeo attended on numerous occasions throughout 2012 on her own behalf as well as accompanying her husband to his appointments. During this time she was suffering with severe anxiety and depression. She needed medication to help her sleep.
In the light of this mental illness it is understandable that Mrs Romeo would be incapable of properly attending to her financial affairs and other obligations.
She was always a very capable and responsible citizen and businesswoman during my many years of dealing with her. She was an exceptionally diligent, hard working individual. She would never voluntarily fail in her duties. Her involuntary refusal to attend to her affairs was as a result of her severe depression.
[2] Exhibit A1, page 2
THE RESPONDENT’S CASE
The Respondent’s case is a straightforward one.
It notes that the medical reports are not contemporaneous but are looking back at the relevant period based on current observations. In any event, the Respondent submits that even if the Tribunal is satisfied that the Applicant’s mental condition at the time was as asserted, there is no evidence to support a contention that her condition was the cause of the failure to respond to the trustee’s requests for information.
The Respondent submits that the evidence suggests the cause of the failure to respond was not the Applicant’s mental state but the fact that she had stopped paying her solicitors their fees. This submission is based on the Applicant’s own statement in paragraph 18 of her affidavit (Exhibit A3) where she says:
My former solicitor Damien Phair was instructed to attend to all of the communications with the trustee there was never any deliberate intention to obstruct stall or delay the trustee in any dealings that they had with me. I admit that through lack of funds at the time I was behind in making instalment payments to Damien Phair on account of outstanding legal costs and this may have been the reason he did not always respond to the trustee but he did have specific instructions to attend to any matters that were raised by the trustee because I was not in a fit state to attend to those matters.
A further factual issue of some significance, in the Respondent’s submission, is that the Applicant seems to have been perfectly capable of instructing her solicitors to seek to obtain the release of her passport from the trustee in February 2013 – despite her claimed inability, because of her mental state, to provide responses to the trustee’s requests for information at around the same time.
That submission is based on the document at page 29 of the Applicant’s affidavit (Exhibit A3), a letter dated 28 February 2013 from the Applicant’s solicitors to the trustee. The letter says:
We confirm Mrs Romeo seeks the consent of the trustee to travel overseas with her grandchildren and her husband on compassionate grounds due to her husband being diagnosed with cancer and whose health is extremely poor and the need for him to enter hospital for treatment shortly after their return to Australia.
CONSIDERATION
I am satisfied that at the relevant time, namely August to October 2012 when the requests for information were sent to and eventually personally served on the Applicant, the Applicant’s mental state was fragile. Indeed, Ms Hawkins’ February 2014 report confirms that the Applicant has suffered from extreme anxiety since 2008. Dr Quittner’s report from December 2015 confirms that the Applicant ‘was suffering with severe anxiety and depression’ during 2012. There can be no doubt, and I find, that the Applicant was suffering from severe anxiety and depression during 2012 notwithstanding the absence of contemporaneous documentation to that effect.
The remaining question is whether the Applicant’s mental state at the relevant time was the cause of her failure to respond to the trustee’s requests for information.
The evidence discloses that, at least by 14 March 2013, the Applicant had made her solicitors aware of the content of the letters of request from the trustee: the solicitors’ letter of that date to the trustee says in part[3]:
In the meantime Mrs Romeo would like to make an appointment to see the trustee when she has completed her search of documents relating to the quantifying of the consideration paid for the shares in BRDG Holdings Pty Ltd.
[3] Exhibit A3, page 31
And yet no information was ever provided to the trustee in relation to that issue (the precise subject matter of the trustee’s letters of August and September 2012).
As far as the passport request is concerned ([23] and [24] of these reasons), the Applicant said, and I accept, that it was not on her own initiative, but on her grandchildren’s, that the family trip to Bali was booked. The Applicant was able to give instructions to her solicitors to ask the trustee to release her passport, but only with the assistance of her daughter, as she stated in cross-examination. As things turned out, the Applicant and her husband eventually decided not to pursue the option of having her passport returned to her, and they both stayed in Australia while the rest of the family took the trip to Bali.
What emerges from the evidence as a whole is that the Applicant was unable to deal with most aspects of her life at the relevant time, but found it particularly difficult to deal with issues to do with the bankruptcy, and especially if they involved interaction with the trustee. Her oral evidence, which I accept, described her feeling of being ‘intimidated’ by the trustee, whose first approach to the Applicant (she said he ‘confronted’ her) came just days after the death of her mother, and even before he had been formally appointed as her trustee. She also regarded the location of the meetings with the trustee as unfair, in that they were arranged at the offices of her brother’s lawyers.
Her coping mechanism seems to have been one of avoidance. She withdrew from her family. She thought she had let them down, and she thought they had abandoned her. She realises now, with the benefit of hindsight, that she was avoiding dealing with issues but she did not realise it at the time. The Respondent’s counsel put it to her that there was no reason she could not have got help from her solicitor or her counsellor, but in the circumstances it was impossible for her to do that because, although she needed help, she did not know how to reach out for it.
I reject the Respondent’s suggestion that the true cause of the Applicant’s failure to respond to the trustee’s requests for information was her failure to pay her solicitors’ fees. The Applicant herself put that no higher than a possibility, but I consider it the least likely explanation of the default. The fact is that the Applicant’s solicitors remained involved in corresponding with the trustee at least in the early months of 2013; the problem was that the Applicant was not providing them with the information the trustee had been asking for. And the reason for that is that the Applicant’s life was unravelling and she could not cope.
CONCLUSION
I am satisfied that the Applicant’s severe anxiety and depression were the cause of her failure to respond to the trustee’s requests for information. She has established that she had a reasonable excuse for failing to provide the information the trustee sought.
It follows that the decision under review should be set aside and the objection to her discharge from bankruptcy should be cancelled.
I certify that the preceding 34 (thirty -four) paragraphs are a true copy of the reasons for the decision herein of Deputy President S E Frost ............................[sgd]............................................
Associate
Dated 29 June 2016
Date(s) of hearing 15 December 2015 Counsel for the Applicant Mr J Johnson Solicitors for the Applicant Proctor Phair Lawyers Counsel for the Respondent Mr M Heath Solicitors for the Respondent Australian Government Solicitor
Key Legal Topics
Areas of Law
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Insolvency
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Administrative Law
Legal Concepts
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Natural Justice
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Procedural Fairness
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Judicial Review
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Remedies
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Causation
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