Tonks as trustee of the Bankrupt Estate of Bolat v Bolat
[2018] FCCA 1332
•23 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TONKS AS TRUSTEE OF THE BANKRUPT ESTATE OF BOLAT v BOLAT | [2018] FCCA 1332 |
| Catchwords: BANKRUPTCY – Application to distribute dividends amongst creditors who have proved their debts in the bankrupt estate under Bankruptcy Act 1966 (Cth), s.146 – where bankrupt has not filed a statement of affairs – where trustee has taken steps to notify the bankrupt of his obligation to file a statement of affairs – where trustee has taken steps to ascertain whether there were other creditors – application allowed – distribution of dividends ordered. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.54, 140, 146 |
| Cases Cited: Sampson (Trustee), in the matter of Condon (Bankrupt) [2016] FCA 312 Roufeil (Trustee), in the matter of Jarvie (Bankrupt) [2015] FCA 232 Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649 |
| Applicant: | BRADLEY JOHN TONKS AS TRUSTEE OF THE BANKRUPT ESTATE OF ENGIN BOLAT |
| Respondent: | ENGIN BOLAT |
| File Number: | SYG 995 of 2018 |
| Judgment of: | Judge Emmett |
| Hearing date: | 23 May 2018 |
| Date of Last Submission: | 23 May 2018 |
| Delivered at: | Sydney |
| Delivered on: | 23 May 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Mr Raymond Roser (Roser Layers) |
| Solicitors for the Respondent: | No appearance by or on behalf of the respondent |
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 995 of 2018
| BRADLEY JOHN TONKS AS THE TRUSTEE OF THE BANKRUPT ESTATE OF ENGIN BOLAT |
Applicant
And
| ENGIN BOLAT |
Respondent
EX TEMPORE
REASONS FOR JUDGMENT
This is an application by the Trustee in Bankruptcy (“the Trustee”)of the Estate of the respondent bankrupt (“the Bankrupt”) made pursuant to s.146 of the Bankruptcy Act1966 (Cth) (“the Act”) seeking an order that distribution of dividends amongst creditors of the Bankrupt who have proved their debts proceed in accordance as if the Bankrupt had filed a Statement of Affairs and those creditors had been stated to be creditors in it.
The Bankrupt did not appear at today’s hearing and no communication was received by the Court from him. However, for the reasons below, I am satisfied that he was duly served and had reasonable notice of today’s hearing.
Relevant Legislation
Section 54(1) of the Act relevantly provides as follows:
“Bankrupt's statement of affairs
(1) Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he or she is notified of the bankruptcy:
(a) make out and file with the Official Receiver a statement of his or her affairs; and
(b) furnish a copy of the statement to the trustee”
Section 140 of the Act provides as follows:
“Declaration and distribution of dividends
(1) The trustee of the estate of a bankrupt shall, subject to this section, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts.
(2) Subject to the retention of such sums as are necessary to meet the costs of administration or to give effect to the provisions of this Act, the trustee shall distribute as dividend all moneys in hand.
(3) Before declaring the first dividend, the trustee must give written notice of the trustee's intention to declare the dividend to anyone the trustee knows of who claims, or might claim, to be a creditor but has not lodged a proof of debt.
(4) The trustee shall, in a notice published or sent in pursuance of subsection (3), specify a reasonable period within which creditors may lodge their proofs of debts.
(5) The trustee shall, before declaring a dividend (other than the first dividend or the final dividend) send notice of his or her intention to do so to each person who, to his or her knowledge, claims to be, or might claim to be, a creditor but has not lodged a proof of debt and has not been sent a notice under this section in relation to the declaration of a previous dividend.
(6) The trustee shall, in a notice sent in pursuance of subsection (5), specify a reasonable period within which creditors may lodge their proofs of debts.
(7) Where the trustee has sent a notice in pursuance of subsection (3) or (5) of this section in relation to the declaration of a dividend, the trustee shall not declare the dividend until after the expiration of 21 days after the expiration of the period specified in the notice.
(8) Subject to subsections (9) and (10), where the trustee declares a dividend, he or she shall pay each creditor who has proved his or her debt the amount due to the creditor and send the creditor a statement in accordance with the approved form in relation to the realization and distribution of the estate.
(9) Where, but for this subsection, the amount due to a creditor in respect of a dividend would be less than $10 or, if a greater amount is, as at the beginning of the day on which the dividend is declared, prescribed by the regulations for the purposes of this subsection, that greater amount, the trustee need not pay that dividend to the creditor.
(10) Where a creditor has furnished to the trustee an authority in writing to pay a dividend due to the creditor to another person, the dividend payable to the creditor may be paid, and the statement to be sent to the creditor in pursuance of subsection (8) may be sent, to that person.
(11) This section has effect subject to an order under section 90SS or 114 of the Family Law Act 1975 (which deal with interlocutory injunctions).
Section 146 of The Act relevantly provides:
“Distribution of dividends where bankrupt fails to file statement of affairs
Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the Court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.”
Proceeding before this Court
The relevant principles to which the Court must have regard in considering whether to make an order under s.146 of the Act are well established. For example, see Sampson (Trustee), in the matter of Condon (Bankrupt) [2016] FCA 312 at [15] – [17] per Perry J; Roufeil (Trustee), in the matter of Jarvie (Bankrupt) [2015] FCA 232 at [5] per Gleeson J; Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649 at [19] per Sackville J. Relevantly in the case before this Court, they are as follows:
a)First, that the Bankrupt has been duly served and had sufficient notice of the application before the Court today and has had a reasonable opportunity to participate should he choose to do so.
b)Second, that there has been no Statement of Affairs filed by the Bankrupt, as is required by s.54 of the Act.
c)Third, that in the proper exercise of the Court’s discretion, the distribution of dividends amongst creditors that have provided Proofs of Debt should be made, relevantly, having regard to the prejudice that creditors may otherwise suffer in the event that no such order is made.
The Trustee read two affidavits sworn by him on 9 April 2018 and 22 May 2018, and an affidavit of Jacklyn Louise Errington, sworn 21 May 2018.
a) Service
Ms Errington’s affidavit deposes to service on the Bankrupt of the Trustee’s application to this Court and supporting affidavit, filed on 10 April 2018, at an address in Meadow Heights, Victoria (“the Meadow Heights Address”). Service was effected on 19 April 2018 via Express Post with a particular tracking number.
Ms Errington then deposes that on 7 May 2018, the Trustee’s lawyers received an Express Post parcel containing the documents sent on 19 April 2018. I note that a copy of the parcel post envelope is annexed to Ms Errington’s affidavit. That parcel post envelope shows that the parcel is addressed to the Trustee’s lawyers and is marked from “Engin Bolat”, the Bankrupt, with the Meadow Heights Address identified as the sender’s address. In the circumstances, I draw the inference that the Bankrupt is living at the Meadow Heights Address.
Further, on 7 May 2018, Ms Errington sent a letter to the Bankrupt at the Meadow Heights Address by Express Post enclosing, inter alia, the present application filed on 10 April 2018 and the affidavit of the Trustee sworn 9 April 2018. The letter also enclosed a copy of Orders made by a registrar of this court on 30 April 2018 allocating the matter to my docket. Further, the letter informed the Bankrupt that the application had been set down for hearing today at 10am and provided the location of the Courtroom.
Ms Errington’s affidavit also annexed a document marked “A”, which I accept to be a search of the tracking number on the Australian Post website, and which discloses that the letter of 7 May 2018 was delivered on 8 May 2018.
On the evidence before me, I am satisfied that the Bankrupt was served by post with the relevant documents at the Meadow Heights Address no later than 8 May 2018. In the circumstances, I am satisfied that the Bankrupt has had reasonable notice of today’s hearing and for otherwise unknown reasons has not participated in the proceeding.
b) No Statement of Affairs
The Trustee’s affidavit sworn 9 April 2018 deposes as to his attempts to contact the Bankrupt and obtain the Statement of Affairs. The Trustee deposed that on 10 November 2016, the Trustee provided the Bankrupt with a copy of a blank Statement of Affairs form requesting its completion. Attached was information about the Bankrupt’s obligation to complete the Statement of Affairs and the consequences that may flow to him if no Statement of Affairs was filed. Also annexed was an extract from the National Personal Insolvency Index, dated 9 April 2018, indicating that no Statement of Affairs had been filed as at that date.
The Trustee’s affidavit sworn 22 May 2018 deposed that the Trustee had not received any contact from the Bankrupt since 9 April 2018. Also annexed is a further extract from the National Personal Insolvency Index, dated 22 May 2018, confirming that as at that date no Statement of Affairs had been filed.
On the evidence before me, I accept there have been several attempts to obtain a Statement of Affairs from the Bankrupt. None have borne fruit.
In the circumstances, I am satisfied that the Bankrupt has failed to file any Statement of Affairs in accordance with his statutory obligations or otherwise.
c) Exercise of Court’s Discretion
On 8 November 2016, a Sequestration Order was made in respect of the Bankrupt’s estate. On 8 November 2016, the applicant was appointed Trustee of the Bankrupt’s estate.
On 3 May 2017, the Trustee entered into an agreement with the Bankrupt’s ex-partner, the co-proprietor of the property at the Meadow Heights Address previously co-owned by the Bankrupt. The agreement was for the ex-partner to purchase the Bankrupt’s interest in the property from the Trustee in whom the property had vested pursuant to s.58 of the Act.
On 9 June 2017, a settlement was reached between the Trustee and the Bankrupt’s ex-partner whereby the ex-partner acquired the Bankrupt’s interest in the property from the Trustee for $95,000.
There is no evidence before me of any other substantial asset of the Bankrupt’s estate.
The applicant’s solicitor, Mr Roser, submits that if an order is not made under s.146 of the Act providing for a distribution of dividends amongst creditors, then prejudice is likely to continue to the creditors.
Mr Roser submitted that any further delay of a distribution of dividends would cause undue prejudice, having regard to the ongoing costs and disbursements being incurred by the Trustee in the administration of the Bankrupt’s estate. In support, Mr Roser read the evidence of the Trustee deposed on 22 May 2017 as follows:
“COSTS ATTRIBUTED TO OBTAINING STATEMENT OF AFFAIRS
5. As detailed in my affidavit of 9 April 2018, the Trustees costs and disbursements of the administration as at 31 January 2018 were $23,427.18 (excluding GST), not less than $4,473.00 (excluding GST) being time costs attributed to work undertaken to obtain his Statement of Affairs.
6. As at 22 May 2018, the Trustee's time costs that can be attributed to work undertaken to obtain the Bankrupt's Statement of Affairs are $5,965.50.
7. As at 22 May 2018, I am instructed by Raymond Roser, the solicitor on record, that the legal time costs and disbursements that can be attributed to work undertaken to obtain the Respondent's Statement of Affairs total approximately $7,642.50 (excluding GST).
8. These costs would not have otherwise been incurred but for the difficulties with contacting the Bankrupt and obtaining his Statement of Affairs.
9. In my opinion, creditors are being prejudiced as a result of the Bankrupt not lodging his Statement of Affairs as I am unable to pay a dividend to creditors until he lodges same or this application is granted by this Honourable Court.”
I accept Mr Roser’s submission that creditors are being prejudiced by the failure of the Bankrupt to file a Statement of Affairs. Further, I accept that any further delay to a distribution to creditors would serve no useful purpose as the property of the Bankrupt has been realised.
To date the Trustee has received only one Proof of Debt, being that received from the judgement creditor. The Trustee accepted that Proof of Debt. On 20 October 2017, the Trustee placed the following advertisement in The Australian:
“BANKRUPTCY ACT 1966 Subsection 140(3),(4)&(5) Notice of Intention to Declare a Dividend Bankrupt Estate of ENGIN BOLAT (Trustee Appointed) Administration No. NSW 4342 of 2016/0
Take notice that as Trustee of the Bankrupt Estate appointed 8 November 2016, I, Bradley Tonks of PKF intend to declare a dividend to creditors.
If you have not submitted to my office a Proof of Debt Form or have previously submitted a Proof of Debt Form which has not been acknowledged by me in writing, you are required to lodge a Proof of Debt in the approved form with me on or before 5:00pm Tuesday, 21 November 2017 should you wish to be included in the dividend.
DATED this 19th day of October 2017.
Bradley Tonks, Trustee PKF, Level 8, 1 O’Connell Street SYDNEY NSW 2000”
(Emphasis in Original)
The Bankrupt was served with notice of today’s hearing. The Bankrupt has not presented any evidence to the contrary in this matter. The Trustee has made numerous attempts to obtain a Statement of Affairs from the Bankrupt and the Trustee has made an effort to discover other creditors of the Bankrupt’s estate.
On the evidence before me, I am satisfied that the Trustee has received one Proof of Debt in the administration of the Bankrupt’s estate, that being from the judgment creditor, Complete Credit Acquisitions Pty Ltd in an amount of $90,392.30.
No further Proofs of Debt have been received by the Trustee.
As a result of the Trustee’s receipt from the Bankrupt’s ex-partner of $95,000 for the Bankrupt’s interest in the property at the Meadow Heights Address, there is now money held in trust that is available to be distributed to creditors.
A distribution cannot be made in the absence of a Statement of Affairs from the Bankrupt and can only be made if an order is made by the Court pursuant to s.146 of the Act to allow the applicant to distribute that dividend.
In my view, an order under s.146 of the Act should be made. However, it should be delayed for at least 14 days after the publication of a Notice of Intention to Declare a First and Final Dividend in the bankrupt estate of the Bankrupt to be published in The Australian, The Age in Victoria and The Courier Mail in Queensland, on the basis that there was some evidence early on that the applicant may have at one time resided in Noosaville, Queensland.
Prior to any dividend being distributed, a search should be conducted no more than 48 hours from the date of distribution of the National Personal Insolvency Index in case the Bankrupt may have filed a Statement of Affairs in that intervening period. The Trustee should also be required to provide to the Bankrupt forthwith at the Meadow Heights Address a copy of the orders made by the Court today.
Proposed Orders
In the circumstances, the following orders should be made:
1. Subject to the following steps being taken by the Applicant, pursuant to s.146 of the Bankruptcy Act 1966 (Cth), a distribution of dividends amongst the creditors who have proved their debts shall be made as if the Respondent had filed a Statement of Affairs and those creditors had been stated to be creditors in it:
(a) A Notice of Intention to Declare a First and Final Dividend in the Bankrupt Estate of Engin Bolat be published in the The Australian, The Age in Victoria, and The Courier Mail in Queensland.
(b) No distribution is to be made until 14 days have elapsed after publication of the last of these Notices.
(c) No distribution is to be made until a search of the National Personal Insolvency Index is conducted within 48 hours of any proposed. distribution and which confirms that no Statement of Affairs has been lodged by the Respondent.
2. The Applicant provide the Respondent with a copy of these Orders forthwith.
3. The costs of the application before this Court are to be costs in the Bankruptcy and paid from the Bankrupt Estate.
I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of Judge Emmett
Date: 29 May 2018
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