Stillman v Pascoe

Case [2010] FMCA 549

FEDERAL MAGISTRATES COURT OF AUSTRALIA

STILLMAN v PASCOE [2010] FMCA 549
BANKRUPTCY – Bankrupt seeking to travel overseas for his son’s wedding – permission to travel denied by the Trustee – application for review – factors relevant to exercise of Court’s discretion – potential for improper use of monies properly belonging in the bankrupt estate – whether bankrupt has hampered administration of the bankrupt’s estate – whether travel will hamper administration of the bankrupt’s estate.
Bankruptcy Act 1966 (Cth), ss.5(1), 58(1)(a), 77(1)(g), 116(1), 133, 139P, 139Q, 139U, 139ZA, 178, 179, 272
Dunwoody v Official Receiver [2005] FMCA 1634
Healy v Prentice (No. 2) [2000] FCA 1598
Khan v Melluish [2010] FMCA 119
Lockwood v Vince [2007] FMCA 1497
Maxwell-Smith v Donnelly (2007) 5 ABC(NS) 232; [2007] FCA 894
O’Brien v Sheahan [2002] FCA 1292
Re Hicks; Ex parte Lamb (1994) 217 ALR 195
Re Tyndall, Ex parte Official Receiver (1977) 17 ALR 182
Applicant: TREVOR JAMES STILLMAN
Respondent: SCOTT PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF TREVOR JAMES STILLMAN
File Number: PEG 111 of 2010
Judgment of: Lucev FM
Hearing date: 20 July 2010
Date of Last Submission: 20 July 2010
Delivered at: Perth
Delivered on: 28 July 2010

REPRESENTATION

Counsel for the Applicant: Mr K Savas
Solicitors for the Applicant: Corser & Corser Lawyers
Counsel for the Respondent: Mr C Donoghue
Solicitors for the Respondent: Carles Solicitors

ORDERS

  1. That the application be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PERTH

PEG 111 of 2010

TREVOR JAMES STILLMAN

Applicant

And

SCOTT PASCOE AS TRUSTEE OF THE BANKRUPT ESTATE OF TREVOR JAMES STILLMAN

Respondent

REASONS FOR JUDGMENT

Mr Stillman applies to travel to the United States of America

  1. On 10 June 2010 the bankrupt, Mr Trevor James Stillman,[1] wrote to his trustee in bankruptcy[2] requesting that the Trustee consent to Mr Stillman leaving Australia, ostensibly for the purpose of attending his son’s wedding in Las Vegas in the United States of America[3] on 4 August 2010. The requested length of the absence from Australia was from 31 July 2010 to 14 August 2010.[4]

    [1] “Mr Stillman”.

    [2] “the Trustee”.

    [3] “USA”.

    [4] Affidavit of Trevor James Stillman sworn 9 July 2010, para.3 and Annexure TJS 1 (“Mr Stillman’s Affidavit”).

  2. Mr Stillman asserts that the administration of his bankrupt estate is being dealt with according to law and that his absence will not affect the administration of the bankrupt estate. Further, he does not believe that his absence from Australia for a short period of two weeks will hamper or adversely affect the administration of his bankrupt estate.[5]

    [5] Mr Stillman’s Affidavit, paras.10 and 11.

The Trustee responds to the travel application

  1. On 25 June 2010 the Trustee’s solicitors wrote to Mr Stillman’s solicitors responding to his application to travel to the USA, and advising as follows:

    Our client’s general policy where a bankrupt requests consent to travel overseas when there are outstanding issues in regard to the proper administration of the bankrupt’s estate is to withhold consent until the…

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AGLC
Stillman v Pascoe [2010] FMCA 549
Case
[2010] FMCA 549
Decision Date

CaseChat Overview and Summary

In the matter of Stillman v Pascoe, the primary issue before the court was whether the trustee's decision to impose conditions on the bankrupt's request to travel to the United States was just and equitable. The bankrupt, Mr Stillman, sought leave to travel, while the trustee, Mr Pascoe, opposed the application on the basis of several outstanding issues related to the administration of the bankrupt estate. These included non-compliance with a Section 77 Notice, a contribution liability under Section 139P, and failure to provide evidence regarding the disclaimer of rental monies received by the bankrupt. The central question for the court was whether Mr Stillman's proposed visit would hinder the administration of the estate.

The court considered whether the trustee's exercise of discretion to impose conditions on Mr Stillman's travel was appropriate. It was noted that interference with a trustee's discretion is a serious matter and should only occur if the bankrupt demonstrates that the trustee's conduct was incorrect, or if alternative conduct would be preferable, and justice and equity require the court to intervene. The court acknowledged the importance of the genuineness of the proposed visit, the likelihood of the bankrupt returning to Australia, and the potential hindrance to the administration of the estate. Ultimately, the court found that the trustee had properly imposed the conditions based on the outstanding issues and determined that Mr Stillman's travel would indeed hamper the administration of the estate.

In light of the considerations outlined above, the court dismissed Mr Stillman's application. The court found that the trustee had acted within his discretion and that the conditions imposed were reasonable in the circumstances. The court emphasised the importance of the trustee's role in ensuring the efficient administration of the bankrupt estate and the necessity of addressing outstanding issues before allowing the bankrupt to travel. As a result, the court upheld the trustee's decision and denied Mr Stillman's request to travel to the United States.

Orders

Orders of the court

1.

That the application be dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Section 178 of the Bankruptcy Act provides as follows:Appeal to Court against trustee's decision etc. (1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable. (2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision. The application was listed urgently for hearing on 12 July 2010, but on that day Mr Stillman consented to orders adjourning the hearing until 20 July 2010 and allowing the Trustee to file further material. The Trustee subsequently filed a Notice Stating Grounds of Opposition to Application setting out the following grounds:1.The Respondent trustee has properly imposed certain conditions pursuant to Section 272(2) of the Bankruptcy Act on his consent to the applicant’s request to leave Australia.2.The conditions relate to the following outstanding issues in regard to the proper and efficient administration of the Applicant’s bankrupt estate in that:(a)the requirements of Section 77 Notice sent to the Applicant on 30 October 2009 have not been fully complied with by the Applicant;(b)The Applicant after belatedly providing income evidence now has a contribution liability for two contribution assessment periods pursuant to Section 139P of the Bankruptcy Act.(c)the failure of the Applicant to provide evidence of his allegation of the Official Trustee disclaimer in regard to rental monies he received flowing from a property that vested in his bankruptcy trustee at the time he became bankrupt. Further, the Applicant’s failure to comply with the Respondent’s letter of 13 March 2009 and subsequent Form 9 Notice of Demand dated 6 April 2009 for the repayment of the rental monies received by the Applicant.[9][9] “Notice of Opposition”. The Trustee also filed an affidavit in support of the Notice of Opposition.[10][10] Affidavit of Andrew John Scott sworn 16 July 2010 (“Mr Scott’s Affidavit”). It has been said that the following issues, whilst not necessarily conclusive, ought to be at the forefront of any consideration of the exercise of the Court’s discretion to review the exercise of the Trustee’s discretion to refuse to allow a bankrupt to travel:a)whether the proposed visit is genuine;b)whether the bankrupt is likely to return to Australia as promised; andc)whether the visit will hamper the administration of the bankrupt’s estate.[11][11] Re Hicks; Ex parte Lamb (1994) 217 ALR 195 at 198 per Heerey J (“Hicks”). In this matter the only contested, and key, issue is whether the proposed visit to the USA by Mr Stillman will hamper the administration of the bankrupt estate. It is a serious decision for a Court to interfere with the Trustee’s discretion, and the Court ought only to do so if Mr Stillman satisfies it that the Trustee’s conduct was incorrect, or other conduct would be preferable, and that justice and equity require the Court to intervene.[12][12] Healy v Prentice (No. 2) [2000] FCA 1598 at para.21 per Madgwick J.

Ratio Decidendi

Legal Principle Established

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