TERRY DONALD HILL and THE INSPECTOR-GENERAL IN BANKRUPTCY - [2012] AATA 69

[2012] AATA 69

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2009/5000
Re	TERRY DONALD HILL
APPLICANT
And	THE INSPECTOR-GENERAL IN BANKRUPTCY
RESPONDENT

DECISION

Tribunal	Senior Member Dean Letcher, QC
Date	8 February 2012
Place	Sydney

The decision under review is affirmed.

..............[sgd]..........................................................

Senior Member Dean Letcher, QC

CATCHWORDS

BANKRUPTCY - power of trustee to object to bankrupt’s discharge before usual period - Trustee raised special and ordinary grounds of objection under s 149D – Decision under review affirmed.

LEGISLATION

Bankruptcy Act 1966 s 116(1), 120, 149D, 149K

Corporations Act 2001 s 206A

Bankruptcy Regulations 1996 reg 6.03

CASES

D’Souza and Inspector-General in Bankruptcy [2010] AATA 708

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449

Briginshaw v Briginshaw (1938) 60 CLR 336

Cannane v J. Cannane Pty Ltd (In Liq) (1998) 192 CLR 557

REASONS FOR DECISION

Senior Member Dean Letcher, QC

8 February 2012

THE BACKGROUND

In the years up to 2002 Mr Terry Donald Hill controlled a group of companies (“the Hill Wine Group”) said to have a turnover of some $A50 million. Mr Hill controlled the affairs in whole or part of The Hill Group Superannuation Fund Pty Ltd, the Terosa Trust (a family discretionary trust), Hill International Wines (NZ) Ltd and numerous other entities. In 2002 the companies in Australia had administrators appointed when his banks refused further finance.
Mr Hill attempted to regain control of the Australian companies by a “back to back” deal whereby Messrs James and Brooks agreed to buy the whole wine production and distribution group from the administrators and agreed with Mr Hill to then sell him the wine distribution companies for the price they had paid for them. Mr Hill assisted this process but then asserted that the price sought from him by James and Brooks was greatly more than they had paid.
Litigation ensued but the upshot was that Mr Hill was made bankrupt (a step which James and Brooks assisted) and obtained no assets. He retains a considerable feeling of grievance and may believe he is entitled to enjoy various assets over which he previously had control. Those assets are now in the control of his trustee in bankruptcy if the trustee is able to locate them, establish Mr Hill’s prior personal ownership of them and prove that they form part of the bankrupt estate.
Mr Hill has obligations under the Bankruptcy Act 1966 (“the Act”) to assist his trustee by giving information, providing full and truthful responses to enquiries and not attempting to deal with the assets. The trustee has obligations under the Act to bring into the estate assets which may have been the subject of void transfers in breach of the Act, to pursue lines of enquiry which may better define the assets and liabilities of the estate and to take steps to obtain the co-operation of the bankrupt for the purpose of the prompt and orderly distribution of assets to creditors.
One of the means of inducing the bankrupt’s co-operation is the power of the trustee to object to the bankrupt’s discharge before the expiration of the usual period of three years, and for the period to be prolonged to allow the trustee’s task to be completed. That is the situation in this case.
Mr Hill is a man of considerable acumen and energy. He trained as an accountant and occupied managerial positions before entering the wine business. In 2002 his business required restructuring, but in the course of that process he believes he was misled and deceived by those about him and he was made bankrupt on 4 July 2006. There has been continual friction between himself and the trustee in bankruptcy. The trustee believes Mr Hill made incomplete disclosure of assets, has not provided proper information on his activities and has attempted to transfer assets to defeat his creditors and obstruct the work of the trustee. Mr Hill states his belief that the trustee is oppressive, paranoid and devious.

THE SITUATION

On 2 May 2009 the trustee filed a notice objecting to Mr Hill being discharged from bankruptcy at the usual time i.e. three years from the date of his Statement of Affairs. This objection, if upheld, would have the effect of extending the period of bankruptcy from 1 May 2012 to 3 August 2014. Mr Hill sought internal review without success and review by the Inspector-General of Bankruptcy, again without success. From the latter’s decision he appeals to the Tribunal for review.

THE LAW

Section 149Q of the Bankruptcy Act 1966 states, inter alia:
Review of decisions
An application may be made to the Administrative Appeals Tribunal for the review of:
(a) a decision of the Inspector-General on the review of a decision of the trustee to file a notice of objection;

In undertaking this review, the Tribunal is bound by s 149N of the Act which states:
Decision on review
(1) On a 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 on grounds that included that ground or those grounds, was cancelled;

the Inspector-General must cancel the objection.
(1A) 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.

For this purpose, special ground means a ground specified in paragraph 149D(1)(ab), (d), (da), (e), (f), (g), (h), (ha), (ia), (k) or (ma).
(1B) In 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.

(2) The cancellation does not take effect until:

(a) the end of the period within which an application may be made to the Administrative Appeals Tribunal for the review of the decision of the Inspector-General; or

(b) if such an application is made--the decision of the Tribunal is given.

(3) If the Inspector-General is not satisfied as mentioned in subsection (1), the Inspector-General must confirm the decision.

Section 149D of the Act provides in relation to a trustee’s objection:
Grounds of objection
(1)The grounds of objection that may be set out in a notice of objection are as follows:
(a)the bankrupt has, whether before, on or after the date of the bankruptcy, left Australia and has not returned to Australia;
(aa)any transfer is void against the trustee in the bankruptcy because of section 120 or 122;
(ab)any transfer is void against the trustee in the bankruptcy because of section 121;
(ac)any transfer is void against the trustee in the bankruptcy because of section 128B;
(ad)any transfer is void against the trustee in the bankruptcy because of section 128C;
(b)after the date of the bankruptcy, the bankrupt contravened section 206A of the Corporations Act 2001 (disqualification from managing corporations);
(c)after the date of the bankruptcy the bankrupt engaged in misleading conduct in relation to a person in respect of an amount that, or amounts the total of which, exceeded $3,000;
(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;
(da)after the date of the bankruptcy, the bankrupt intentionally provided false or misleading information to the trustee;
(e)the bankrupt failed to disclose any particulars of income or expected income as required by a provision of this Act referred to in subsection 6A(1) or by section 139U;
(f)the bankrupt failed to pay to the trustee an amount that the bankrupt was liable to pay under section 139ZG;
(g)at any time during the period of 5 years immediately before the commencement of the bankruptcy, or at any time during the bankruptcy, the bankrupt:
(i)spent money but failed to explain adequately to the trustee the purpose for which the money was spent; or
(ii)disposed of property but failed to explain adequately to the trustee why no money was received as a result of the disposal or what the bankrupt did with the money received as a result of the disposal;
(h)while the bankrupt was absent from Australia he or she was requested by the trustee to return to Australia by a particular date or within a particular period but the bankrupt failed to return by that date or within that period;
(ha)the bankrupt intentionally failed to disclose to the trustee a liability of the bankrupt that existed at the date of the bankruptcy;
(i)the bankrupt has failed, whether intentionally or not, to disclose to the trustee a liability of the bankrupt that existed at the date of the bankruptcy;
(ia)the bankrupt failed to comply with subparagraph 77(1)(a)(ii);
(j)the bankrupt failed to comply with paragraph 77(1)(bb) or (bc) or subsection 80(1);
(k)the bankrupt refused or failed to sign a document after being lawfully required by the trustee to sign that document;
(l)the bankrupt failed to attend a meeting of his or her creditors without having first obtained written approval of the trustee not to attend or without having given to the trustee a reasonable explanation for the failure;
(m)the bankrupt failed to attend an interview or examination for the purposes of this Act without having given a reasonable explanation to the trustee for the failure;
(ma)the bankrupt intentionally failed to disclose to the trustee the bankrupt’s beneficial interest in any property;
(n)the bankrupt failed, whether intentionally or not, to disclose to the trustee the bankrupt’s beneficial interest in any property.

THE TRUSTEE’S OBJECTIONS

The trustee’s objections rely upon specified breaches of the bankrupt’s obligations under the subsections of s 149D(1) of the Act, namely:

Special Grounds

(1)Section 149D(1)(ab) a transfer of property of the bankrupt is void against the trustee because of s 120(1) i.e. no or inadequate consideration.
(2)Section 149D(1)(da) after the date of bankruptcy the Applicant intentionally provided false or misleading information to the trustee.
(3)Section 149D(1)(g)(ii) at any time during the period of 5 years immediately before the commencement of the bankruptcy, or at any time during the bankruptcy, the Applicant disposed of property but failed to explain adequately to the trustee why no money was received as a result of the disposal or what the Applicant did with the money received as a result of the disposal.
(4)Section 149D(1)(ma) the Applicant intentionally failed to disclose to the trustee the Applicant’s beneficial interest in any property.
(5)Section 149D(1)(ha) the Applicant intentionally failed to disclose to the trustee a liability existing at the date of the bankruptcy.

Ordinary Grounds

(6)Section 149D(1)(aa) a transfer of property of the bankrupt is void against the trustee because of s 120 or 122.
(7)Section 149D(1)(b) after the date of bankruptcy the Applicant contravened s 206A of the Corporations Act 2001 whilst he was disqualified from managing a corporation.
(8)Section 149D(1)(d) the Applicant, when requested in writing by the trustee to provide written information about the Applicant’s property, income or expected income, failed to comply with the request.
(9)Section 149D(1)(i) the Applicant has failed, whether intentionally or not, to disclose to the trustee a liability of the Applicant that existed at the date of the bankruptcy.
(10)Section 149D(1)(n) the Applicant failed, whether intentionally or not, to disclose to the trustee the Applicant’s beneficial interest in any property.

The trustee’s objections may relate to actions tending to defeat the main purposes of the bankruptcy (“special grounds”) or less serious actions (“ordinary grounds”).
“Special grounds” (s 149C(1A)) are those which do not require the trustee to state the reasons for objecting to discharge on that ground but for each “ordinary ground” the trustee must do so (s 149C(1)).

THE FACTS AND FINDINGS

The trustee’s particular objections and the supporting section of the Act were as follows:

Under s 149D(1)(aa) a transfer of property within 5 years of bankruptcy of the bankrupt is void if it is for no or insufficient consideration.

There are defences available including a defence if it is proved that the bankrupt was solvent at the time.
On 1 June 2002 Mr Hill’s valuable shareholding in Hill International Wines (NZ) Ltd (“HIWNZ”) was transferred to his wife Elena Rose by Deed without money consideration. Mr Hill has said that a payment by BDT Holdings Pty Ltd (“BDT”) to Mr James of $1,257,000.00 was in fact a loan to Mr Hill following a Loan Agreement between BDT and Mr Hill on 20 May 2002, and that the payment was consideration for the transfer.
That Loan Agreement recites a loan to Mr Hill of $1,500,000.00 and “future advances” of up to a total of $4 million. Elena Rose was sole shareholder and director of BDT, but the transfer of shares was to her personally not BDT, and I find that there was no valuable consideration able to be established.
The value of the shares is not certain but at 30 June 2002 the HIWNZ company’s financial statements asserted a book value of net equity as $269,831.00. Mr Hill’s affidavit of 19 December 2005 asserts personal ownership of 99 per cent of the issued shares (T.573) and the other 1 per cent was held on trust for Mr Hill. The value of such shares was lost to the bankrupt estate by the transaction unless it is set aside or declared void.
Mr Hill says that the loan by BDT was procured by Elena Rose and that was the consideration for the transfer of shares by Deed.
Neither document mentions the other, and Clause 4 of the Loan Agreement explicitly states that BDT had no security for the loan. Mr Hill has tried to maintain that the transfer of the shares to Elena Rose amounted to security for the loan although the documents contradict this construction.
Mr Hill was clearly insolvent at the time of the transfer. His affidavit sworn 14 January 2003, in an action brought by Diners Club Pty Ltd against him, asserts a deficiency in assets/liabilities of $460,940.02 (T.132-135). His Statement of Affairs dated 22 July 2005 lists debts of over $3 million incurred in 2001/2002 and unpaid at 2005 and lists assets of greatly less (T.121,126).
I find that Mr Hill was insolvent as at 1 June 2002 within the meaning of the Act and cases concerning s 120 of that Act. The test is the ability to pay debts as they may fall due and it is clear that Mr Hill was unable to do so.
Section 149D(1)(aa) is an ordinary ground. Objecting on this ground was intended to be an incentive to the bankrupt to co-operate with the trustee and to assist him in revealing assets of the estate. I believe that reasoning is correct. I uphold this ground of objection.

Under s 149D(1)(ab) a transfer of property at any time is void if the transferor was or was about to become insolvent and the property would probably have been available to creditors.

Section 149D(1)(ab) is a special ground based upon the same facts as the previous ground i.e. transfer of the shares with no or inadequate consideration. For the same reasons set out above I uphold this ground of objection.

Section 149D(1)(b) contravention of s 206A Corporations Act 2001 by managing a corporation during bankruptcy.

Section 149D(1)(b) is an ordinary ground. The allegations were that Mr Hill involved himself in the affairs of several companies dealing in wine in a manner consistent with control and direction rather than as a “consultant”.
After the date of his bankruptcy, Mr Hill remained a director of Australian Wine Producers and Exporters Pty Ltd (ASIC search 7 Jan 2009 T.210) and Hill Group Superannuation Pty Ltd (ASIC search 23 April 2009 T.213), with the capacity and legal obligation to exercise a director’s functions.
Further, he communicated instructions concerning payment for wine assets of Rosehill Wine Corporation Pty Ltd on 1 April 2008, 21 April 2008 and 24 July 2008. In the last communication he referred to supplies of “Rosehill Wine”, to “our Organic wine company” and his planned trip with Elena to Canada (T.220-222) was for business purposes of Rosehill Wine Corporation Pty Ltd.
In his court examination in 2005 he asserted that his role was only as a consultant (T.290), that his wife almost always was present at business meetings (T.291), but he agreed the work he did was similar to the work of an “export manager” (T.291). This evidence was equivocal on the point of control.
Mr Hill’s email 19 December 2007, ostensibly conveying requests of his wife, in fact deals directly with accounts, terms of loans and a demand for a payment of shareholders loans in Vintage Wines & Spirits Ltd in terms appropriate only to a director or major shareholder in Vintage Wines & Spirits Ltd or HIWNZ. Mr Hill’s solicitor by letter on 7 September 2006 stated that BDT (not Elena personally) owned the Vintage shares.
I find that Mr Hill participated in making decisions affecting a substantial part of the business, exercised capacity to affect significantly the company’s financial standing and communicated instructions, other than in a professional capacity, in respect of Rosehill Wine Corporation Pty Ltd and Vintage Wines & Spirits Ltd. The reasons of the trustee for making the objection relate directly to the identification of assets, which might be recovered for the bankrupt estate, to Mr Hill’s business activity which involves those assets, and to providing an incentive for Mr Hill to co-operate in the administration of the bankruptcy. I uphold this ground of objection.

Section 149D(1)(d) - bankrupt failed to comply with trustee’s written request for written information about property.

Firstly, the Schedule to the Trust Deed of Terosa Trust, undated except for the year 1999, describes Mr Hill as a “prospective beneficiary”.
The trustee on 3 July 2007 made a written request by email for details of the Terosa Trust and Mr Hill replied on 25 July 2007 (T.260-261). He denied that he was a beneficiary in response to the questions as to whether he was or had ever been a possible beneficiary or object of the trust.
Elena Rose’s statutory declaration of 11 June 2002 shows Mr Hill as a beneficiary (T.285) and his own statutory declaration of 13 January 2002 states:
“There are no other beneficiaries of the Terosa Trust other than those mentioned in the Schedule to the Trust Deed dated 30 April 1999.”
This clearly refers to the Schedule naming him as a prospective beneficiary.
Mr Hill has claimed that in part satisfaction of the loan by BDT to him, as per the Loan Agreement of 20 May 2002, he gave up his right to be a beneficiary under the Terosa Trust. No document has ever been produced to support that claim, which appears to be inconsistent with the statutory declarations. It may be consistent with his intemperate letter to his accountants of 25 June 2004 (T.281) on a related subject which denied that he was a beneficiary, but there is no other support for that denial.
If he were a prospective beneficiary he would have an interest amounting to “property” under the Act.

I find that Mr Hill was a prospective beneficiary of the Terosa Trust at the time of his trustee’s written request, and that he failed to give full and truthful information on that subject to his trustee.
Secondly, on 28 November 2008 the trustee found cases of wine at Mr Hill’s premises and required information by letters dated 28 November 2008 (T.333) and 15 December 2008 (T.340) after demanding possession of the wine. Mr Hill’s solicitors conveyed his instructions that six cases of 1996 Basedow wine were a gift in 2004 by Mr Hill to his daughter and five cases were a gift to Elena in 2004.
They alleged that six bottles of 1990-1996 Octavian were Mr Hill’s property “for his personal consumption” and were thus excluded assets under Bankruptcy Regulations 1996 regulation 6.03(3)(a) “foodstuffs”. The Basedow was worth about $70.00 per bottle and the Octavian about $99.00 per bottle.
While s 116(1) of the Act provides that exempt household items may extend to antiques, the meaning of “foodstuffs” is elucidated by the context in sub-regulation (3)(a):
“in the case of kitchen equipment, cutlery, crockery, foodstuffs ……. bedding, linen, towels and other household effects” [my emphasis] – that property to the extent that it is reasonably appropriate for the household”
having regard to factors such as the number and ages of the members of the bankruptcy’s household and whether the property is reasonably necessary for the functioning or servicing of the household.
The test is whether it is household property reasonably necessary for domestic use, having regard to current social standards.
Mr Hill was undoubtedly a wine expert and connoisseur but $99.00 bottles of wine are not “foodstuffs” within the meaning of that word as it appears in the context of “cutlery….. bedding, linen etc” in that list. Although it is not an exclusive list, the expensive wine cannot be seen as “reasonably necessary for domestic use”.
The probability of the 11 cases of expensive wine found at Mr Hill’s residence being gifts some four years before to his wife and daughter is affected by contradictory answers given by Mr Hill in his Statement of Affairs sworn 3 July 2006. He answered “No” to the question “Have you sold, transferred or given away any assets worth more than $1,000.00 in the last 5 years?”
If he claimed the Octavian wines as foodstuffs that should have been disclosed in answer to Question 30 concerning assets in somebody else’s possession and Question 37 about items of value.
The reason for the trustee’s objection on this ground was to give an incentive to Mr Hill to give a full account of the transactions involving those assets to assist the recovery of assets or their value.
I uphold this ground of objection.

Section 149D(1)(da) after the date of the bankruptcy the bankrupt intentionally providing false information to his trustee.

Firstly, the trustee complains that Mr Hill intentionally provided false information to him when he asserted two different and contradictory reasons for his bankruptcy in his Statement of Affairs. In the first he asserted the reason to be “National Australia Bank forced companies into liquidation” (T.120) yet in the second he alleged that the reason was his Personal Insolvency Agreement trustee’s “failure ... to seek monies owing to me” (T.236). It is not necessary to decide how “intentionally” should be construed.
Each of the above statements is a matter of opinion and a possible view of facts at different times in the path to bankruptcy. I do not regard them as demonstrably false or misleading, or as irrelevant to the later bankruptcy. I find against this part of the objection.
Secondly, the trustee also complains that he obtained from Mr Hill a trial balance sheet for Hill Group Superannuation Pty Ltd at 30 June 2003 showing under the bold heading “Debentures” an asset “Debenture” with the balance of two lines blank and a value of $398,993.00. The trustee then obtained another copy from the company’s accountants which had the entry:
“Debentures in unlisted companies
Debenture – Terosa Trust $398,993.00”
The trustee says the full entry was altered by Mr Hill to disguise the fact that the Super Fund had lent money to the Trust. If the Fund and the Trust were related entities there was a breach of the “in house asset” rules, and the Super Fund could be regarded as an “unregulated fund”. The significance is that such a fund is not protected property under the Act, and Mr Hill’s interest in the Fund would or could be an asset in his estate.
While there is no direct evidence that Mr Hill “whited out” or “redacted” the document he gave the trustee, it was not a true copy of the document created by the accountants and the significance of the difference was known to Mr Hill.
This is established by his reaction (T.281) to his accountant’s letter pointing out the difficulty if the Fund had lent to a Trust of which Mr Hill was a beneficiary (T.279).
It is not necessary to make a finding as to who altered the balance sheet or why. It is sufficient that Mr Hill supplied a sheet with an obvious gap of financial and legal significance to his trustee.
The “intent” required in this subsection is inferred if the effect of what he did would reasonably be expected to have the effect of removing from his estate a fund from which debts could be paid (Cannane v J. Cannane Pty Ltd (In Liq) 1998 192 CLR 557 at 12). In my view the misleading description of a large sum which could have been treated as a non-protected asset in the bankruptcy estate would reasonably be expected to deprive creditors of that amount.
Thirdly, Mr Hill trading as Hill International Wines owed money for wine purchased from Browns of Padthaway, but did not disclose this debt or the asset in his Statement of Affairs. He arranged storage of the wine under his own name and paid storage fees from his own Amex card. When a quantity was stolen he claimed for the loss and then directed that the cheque be made payable to BDT (rather than himself). Later he directed the store to transfer the remaining wine in his name to Wine Ark and still later altered the name of the storage account to BDT.
No document has been produced supporting any contention of purchase by BDT of that wine, nor of payment of storage fees. Mr Hill has maintained that other entities were responsible for the purchase and were the owners of the wine but the documents which have been located indicate his personal ownership. For example, business name registered to Mr Hill (T.89), sale invoice to Hill International Wines (T.28), release agreement by Mr Hill as storer with direction for payment to BDT (T.153-154), direction by Mr Hill to transfer to Wine Ark dated 6 April 2005 (T.164) and change of account name dated 1 May 2006 (T.461).
The wine was sold for some $1,227,982.00 and invoiced to “Hill International Wines”, a business name of which Mr Hill was the registered proprietor. He says Lymall Pty Ltd was the holder of the liquor licence, it was that company which was liable and the wrong description was Browns’ fault. However, Browns was a petitioning creditor upon whose application the Sequestration Order was made in 2006. During the next five years no move was taken by Mr Hill to set aside the Order. (That Order was a Consent Order – Mr Hill says he gave no consent and it was his trustee, Rodgers, who consented without his knowledge or approval. No steps were taken against the trustee or against the Order. The liability was the subject of a proof of debt and the claim was not withdrawn by the creditor.)
The liability arose from the acquisition of a valuable asset forming part of Mr Hill’s estate which would ordinarily become available for distribution to his creditors.
As stated previously, I do not find that Mr Hill intentionally provided false information in respect of the reasons for his bankruptcy. I do find, however, that Mr Hill did intentionally provide false information to his trustee concerning the Terosa Trust and the stored wine as alleged. Therefore, on balance, I uphold this ground. This is a special ground.

Section 149D(1)(g) disposed of property but failed to explain why no money was received or what was done with any money received.

This refers to the dealing with Mr Hill’s wine collection which was stored with Millers Self Storage and, at a later stage, with Kennards Self Storage Pty Ltd as dealt with in the preceding ground. It was claimed that a part of the collection was stolen, a claim of $68,902.80 was paid but at Mr Hill’s direction the money was paid to BDT. The residue of the collection was transferred to Wine Ark and the name of the storage account was altered from Terry Hill to BDT. The value of the insurance claim and the value of the residual wine collection were never paid to Mr Hill’s estate or his trustee, as should have been the case. Mr Hill has never explained satisfactorily why amounts payable to him relating to the wine were not received by him nor explained the disposal of the wine to BDT or other entity. This is a special ground. I uphold this ground of objection.

Section 149D(1)(ha) intentionally failed to disclose to the trustee a liability existing at the date of bankruptcy

Mr Hill incurred a debt to Continental Spirits Co Pty Ltd of some $112,697.77 plus costs and interest, according to his own affidavit sworn in County Court proceedings on 14 January 2003. The creditor lodged a proof of debt. Mr Hill’s Statement of Affairs of 22 July 2005 did not include this debt (T.126-127). Nor did it include other debts to creditors who had indicated they would not support his proposal for a Personal Insolvency Agreement (as an alternative to a Sequestration Order).
Mr Hill’s lawyers claimed that the failure to include this liability was due to an “oversight”. There is no direct evidence that this claim is not the truth. Given that the total indebtedness was over $3 million this is certainly a possible situation. A suspicion that this debt was not disclosed because the creditor was unlikely to support Mr Hill’s proposal is only a suspicion of the trustee, rather than an opinion based on firm evidence.
Proof of the intention in this subsection may be satisfied by objective facts from which an inference can be drawn that the bankrupt had the intention to deceive or deprive the trustee of the requisite information. If the effect of what was done “would reasonably be expected to have such a consequence” then the test may be satisfied. However, in this case, I believe the evidence of objective facts from which an inference of intention can be drawn is lacking given the profusion of debts and the absence of any admission or overt act to disguise the debt.
Accordingly, I find that this ground of the objection is not made out and the decision is not affirmed. This is a special ground.

Section 149D(1)(i) failed to disclose to the trustee a liability that existed at the date of bankruptcy

This ordinary ground also concerns the Continental Spirits debt dealt with above, and for the reasons set out I find that this ground of the objection is not made out and, therefore, this ground of objection is not upheld. While the liability was not disclosed, the excuse of oversight is reasonable in view of the large number and size of the debts

Section 149D(1)(ma) intentional failure to disclose beneficial interest in property.

This ground concerns Mr Hill’s interest in the Terosa Trust, the cases of wine discovered by the trustee in 2008 and his shareholding in HIWNZ transferred to Elena Rose. This is a special ground and the relevant intention is to be inferred from the circumstances by which these assets were subtracted from his estate, so as to reduce significantly the fund from which creditors might be paid. The factual elements are set out above in relation to other grounds.
I find this ground established and I uphold this ground of objection.

Section 149D(1)(n)intentionally or not failed to disclose beneficial interest in property.

The facts relied upon are as for ground nine and the trustee’s reasons include providing an incentive for Mr Hill to disclose valuable assets and co-operate in the administration of his estate. I find this ground established and the reasons for lodging the objection on this ground valid. I affirm the decision under review.
Mr Hill’s financial affairs have been genuinely complex involving a range of Australian and New Zealand companies, trusts and a superannuation fund. Mr Hill relies upon undocumented agreements for proof of, inter alia:
(1)Lymall Pty Ltd being a “true debtor” for the transactions Browns relied upon for the Sequestration Order.
(2)His deletion as a beneficiary of Terosa Trust.
(3)Security given to Elena Rose of valuable HIWNZ shares for a loan of $1.5 million by BDT.
(4)Use of his personal Amex card by BDT for storage fees for wine he says was owned by BDT.
(5)A role as a Consultant for Rosehill Wine Corporation Pty Ltd.
Mr Hill’s actions and lack of co-operation with his trustee have resulted in substantial assets remaining outside the trustee’s reach and likely to remain so until laborious and repetitious litigation before the Federal Magistrates Court, the Federal Court and the Administrative Appeals Tribunal is concluded.
Mr Hill is a veteran of litigation in all these jurisdictions. He called no witnesses and produced no new documents in this hearing. I pointed out to him early in the proceedings that his wife (said to be estranged but still in Sydney) could be seen as an important witness available by summons if not voluntarily. I pointed to a variety of documents which could, if they existed, assist his case and that various items of property should not be included in his bankruptcy estate. I made it clear to Mr Hill that inferences could be drawn that if he did not call available witnesses or tender documents available to him that the witnesses and documents would not have assisted his case. The only witness he sought to summons was his trustee, Mr Piscopo, whose reasons for his actions and beliefs were set out in his objection. I formed the view that Mr Hill’s real reason was to attempt to disparage and vent his irritation against the trustee, and that this was impermissible and not a legitimate forensic objective.
Mr Hill’s demeanour and submissions in the course of the hearing only reinforced the view that he was seeking revenge and redress for what he perceived as the provocation, harassment and persecution by his trustee.
The Respondent’s case was entirely documentary. Mr Hill produced no additional documentation of his claims and gave sworn evidence, but his demeanour was combative and his responses to questions evasive, incomplete and unhelpful.
The same characteristics marked his responses in the past to any questioning of his opinion or version of events. One instance was in June 2004 when Ernst & Young, his own accountants, queried whether the loan from Hill Group Superannuation Fund to BDT or Terosa Trust was an “in-house” transaction, possibly jeopardising the tax status of the Fund. Mr Hill, by letter, angrily denounced this suggestion, terminated his retainer of Ernst & Young and refused to pay an outstanding amount. The accountants’ concern was justifiably moderate and proper in the circumstances. The response was not of the same character.
A difficulty in Mr Hill’s case was that his oral evidence was unsupported by others, it left unanswered serious concerns arising from contemporaneous documents and critical transactions were left appearing illogical or improbable. The Respondent submitted that Mr Hill’s evidence should be accepted only when it was supported by documents. Without going to that extent, it became clear that where his testimony conflicted with a contemporaneous document, the latter was to be preferred.
The question of the correct ownership of the wine collection placed in storage with Millers Self Storage and eventually with Wine Ark was an example of the problem. The owner was recorded on those companies’ documents as Mr Hill. Mr Hill maintained that his name appeared only because storage payments were made by his personal Amex card and BDT had no credit card. However, when a part of the collection went astray the insurance recovery was directed to Mr Hill before he instructed otherwise. He maintained that the storage companies recorded the owner wrongly, that BDT had paid all related Amex debts (without any evidence that this was so) and that changing the name of the owner from Mr Hill to BDT was not done at any critical time.
In part, this was similar to his explanation as to why Browns was not a true creditor in this bankruptcy and again no document supported his case.
The standard of proof to be applied to each ground of objection is the balance of probabilities (D’Souza and Inspector-General in Bankruptcy 2010 AATA 708; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd 1992 110 ALR 449 at 450) but the strength of the evidence necessary to establish a fact to that standard may be greater according to the unusual or serious nature of the conduct and facts alleged (Briginshaw v Briginshaw 1938 60 CLR 336 at 362-363). A tribunal should not lightly make a finding that a person has been party to dishonest or reprehensible conduct. I find that there is strong evidence to support the individual grounds where I have determined to uphold them.
The Inspector-General in Bankruptcy’s decision on each normal ground also included a statement of reasons for objecting to the discharge on the particular ground (as did the trustee’s original objection). This reflected a judgment made as to whether the bankrupt’s conduct provided a sound reason and basis for the extension. I have considered the reasons given and find them persuasive.
Even if the trustee were actuated by malice, incompetence, conspiracy, pique or envy (and all have been alleged by Mr Hill but on which I make no finding adverse at all to the trustee), the conduct and facts proved require the conclusions reached and the application of the sections of the Act.

THE SECOND AND THIRD OBJECTIONS

The Respondent submitted that this application for review should be dismissed as vexatious or not useful, given that second and third objections had been lodged by the trustee, and the Applicant was out of time to seek review of those matters. The second objection lodged on 15 October 2009, was upheld by the Inspector-General in Bankruptcy and no application for review was filed in the time limited. Although there is an application filed to extend that time it has not been pursued. The third objection was lodged on 18 January 2010 and there has been no application lodged for review.
I have taken the view that the Applicant has sought review by this Tribunal of the decision being the review pursuant to s 149K of the Act by the Inspector-General in Bankruptcy of 29 September 2009 and the Applicant is entitled to have a determination of that question. A full array of material was not available to assist in deciding the various questions likely to arise in forming definite conclusions on the matters concerning the other objections.

CONCLUSION AND DETERMINATION

In respect of each individual ground of objection, the Tribunal finds as follows:

(a)With respect to Grounds 1 - 4, 6, 9 and 10, each of these grounds is upheld in full.
(b)With respect to Ground 5, the ground is upheld except in reference to the Applicant’s information concerning reasons for bankruptcy.
(c)With respect to Grounds 7 and 8, these grounds are not upheld.

As a result the decision under review, being the decision of the Inspector-General in Bankruptcy of 29 September 2009 to uphold the objection to discharge the Applicant from bankruptcy, is affirmed.

I certify that the preceding 82 paragraphs are a true copy of the reasons for the decision herein of Senior Member Dean Letcher, QC.

.............[sgd]...........................................................

Associate

Dated 8 February 2012

Date(s) of hearing	4 and 5 November 2010
Applicant	In person
Solicitors for the Respondent	Sally Nash & Co