Wangman v Official Receiver

Case [2006] FCA 202

FEDERAL COURT OF AUSTRALIA

Wangman v Official Receiver, Insolvency & Trustee Service Australia [2006] FCA 202

BANKRUPTCY – statement of affairs – requirements of s 54(1) Bankruptcy Act 1966 (Cth) – whether statement of affairs should be treated as being filed at a time earlier than it was actually filed – s 33A Bankruptcy Act 1966 (Cth) – whether defects in statement of affairs such that document not a ‘statement of affairs’ for purposes of either s 54(1) or s 33A Bankruptcy Act 1966 (Cth)

Bankruptcy Act 1966 (Cth)

Chronis v DS Queen Street Mall Pty Ltd [2004] FMCA 1107
House v R (1936) 55 CLR 499
Nilant v Macchia (2000) 104 FCR 238, 178 ALR 371
Sobey v Duncan [2005] FMCA 1170

LINDSAY JOHN WANGMAN v OFFICIAL RECEIVER, INSOLVENCY & TRUSTEE SERVICE AUSTRALIA

QUD 113 OF 2005

COLLIER J
15 MARCH 2006
BRISBANE


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

QUD 113 OF 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

LINDSAY JOHN WANGMAN
APPELLANT

AND:

OFFICIAL RECEIVER, INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
RESPONDENT

JUDGE:

COLLIER J

DATE OF ORDER:

15 MARCH 2006

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellant pay the respondent’s costs of the appeal.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

QUD 113 OF 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

LINDSAY JOHN WANGMAN
APPELLANT

AND:

OFFICIAL RECEIVER, INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
RESPONDENT

JUDGE:

COLLIER J

DATE:

15 MARCH 2006

PLACE:

BRISBANE

REASONS FOR JUDGMENT

  1. This is an appeal from the judgment of Jarrett FM (Wangman v Official Receiver [2005] FMCA 504), delivered 18 April 2005, wherein the learned Magistrate dismissed an application for orders that the statement of affairs of the appellant (‘the appellant’) filed on 2 February 2005 be backdated to 1998, and the Court discharge him from bankruptcy forthwith.

  2. The Federal Court of Australia (‘the Federal Court’) has jurisdiction to hear appeals from decisions of the Federal Magistrates Court exercising original jurisdiction under the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’): s 24(1)(d) Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act’). The appellate jurisdiction of the Federal Court is exercised by a Full Court unless the Chief Justice considers it is appropriate for the appellate jurisdiction of the Federal Court in relation to the appeal to be exercised by a single judge: s 25(1) and s (1A) Federal Court Act. The Chief Justice has directed that this appeal be heard by a single judge.

  3. Appeals from Federal Magistrates are appeals by way of rehearing: Low v Commonwealth [2001] FCA 702 at [3]; WAJR v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 624 at 628; George v Deputy Commissioner of Taxation [2004] FCA 1433 at [11]. Accordingly, the parties are able to supplement the evidence before the Court by seeking to…

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AGLC
Wangman v Official Receiver [2006] FCA 202
Case
[2006] FCA 202
Decision Date

CaseChat Overview and Summary

In the matter of Wangman v Official Receiver, the appellant, a plumber who had been made bankrupt in 1998, sought to have his bankruptcy treated as having commenced on an earlier date, and to be discharged forthwith. The appeal was dismissed by the Federal Magistrates Court and the matter was brought to the Federal Court of Australia for review. The appellant's appeal centred on the application of section 33A of the Bankruptcy Act 1966 (Cth), which allows for a statement of affairs to be treated as having been filed earlier than it actually was, under certain conditions. The appellant argued that he had reasonably believed that his 1998 statement of affairs had been filed and accepted by the Insolvency and Trustee Service of Australia (ITSA), and that he should be discharged from bankruptcy immediately.

The court was required to determine whether the appellant had a reasonable belief that his 1998 statement of affairs had been filed before it was actually filed, and whether the Federal Magistrate had correctly exercised his discretion under section 33A(2) of the Bankruptcy Act. The court also needed to consider whether the defects in the 1998 statement of affairs were so significant that the document could not be considered a valid statement of affairs at all.

The court found that the appellant had reasonably believed that his 1998 statement of affairs had been filed until 9 July 1999, when he was informed that it had not been accepted by ITSA. However, the court held that even if the appellant had continued to hold that belief after this date, it would not have been reasonable for him to do so. The court also found that the appellant knew that his bankruptcy would not commence until a properly completed statement of affairs had been filed with ITSA. Consequently, the court held that the discretion given to it by section 33A(2) of the Bankruptcy Act was not enlivened. Even if it had been, the court held that it would be disinclined to exercise that discretion in favour of the appellant, on the basis that he had been uncooperative. The court further held that the defects in the 1998 statement of affairs were so significant that the document could not be said to be a statement of affairs at all.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs of the appeal.

Background

Background to the litigation

Appeals from Federal Magistrates are appeals by way of rehearing: Low v Commonwealth [2001] FCA 702 at [3]; WAJR v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 624 at 628; George v Deputy Commissioner of Taxation [2004] FCA 1433 at [11]. Accordingly, the parties are able to supplement the evidence before the Court by seeking to adduce additional material which may be admitted into evidence: Low v Commonwealth supra.BACKGROUND The facts of this case are outlined clearly and comprehensively in the Reasons for Judgment of the learned Federal Magistrate. I shall endeavour to summarise the salient points. The appellant is a plumber by trade, and became bankrupt as a consequence of a sequestration order made against his estate by the Federal Court Queensland District Registry on 2 September 1998. Messrs Philip Gregory Jefferson and Jay Arscott Stevenson were appointed trustees in bankruptcy of the appellant’s estate. Mr Stevenson was subsequently replaced by Mr Gerald Collins as trustee in 2000. Messrs Jefferson and Collins are currently the trustees in bankruptcy of the appellant. The replacement of Mr Stevenson as trustee by Mr Collins in 2000 is not relevant to the matter before this Court. Almost all formal communications from the trustees to the appellant were from Mr Jefferson. A statement of affairs is required to be completed and filed by a bankrupt pursuant to s 54(1) Bankruptcy Act. This section provides:‘(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 for the District in which the sequestration order was made a statement of his or her affairs; and(b) furnish a copy of the statement to the trustee.Penalty: 5 penalty units’ Section 149 Bankruptcy Act provides that a bankrupt is discharged at the end of the period of three years from the date on which the bankrupt filed his or her statement of affairs. It therefore follows that it is of utmost importance from the point of view of any bankrupt, including the appellant, for the purposes of facilitating prompt discharge from bankruptcy at the end of three years, that the statement of affairs be filed as soon as possible. On 8 September 1998 Mr Matthew Joiner attended the appellant at the appellant’s premises in Gumdale in suburban Brisbane. Subject to the supervision of the trustees, Mr Joiner was responsible for the day to day administration of the appellant’s bankrupt estate. During the course of the attendance, Mr Joiner delivered to the appellant a bundle of documents including:(a) a Notice informing the appellant that(i) he had been made bankrupt by a sequestration order on 2 September 1998;(ii) Messrs Jefferson and Stevenson were the trustees of his bankrupt estate;(iii) within 14 days he was required to make out and file a statement of affairs, a copy of which was enclosed with the Notice, with the Official Receiver and to furnish the trustees with a copy of the statement;(iv) the term of his bankruptcy would commence once the duly completed statement of affairs was lodged with the Official Receiver. This particular point was emphasised in the Notice, being in bold uppercase lettering at the bottom of the first page of the Notice; and(v) while it was his responsibility to lodge the statement of affairs, the trustees were prepared to lodge it on his behalf if he wished.(b) a letter enclosing(i) a sealed copy of the sequestration order made against his estate, (ii) a Notice entitled ‘Warning Some Responsibilities of a Bankrupt’ (which noted the time requirements relevant to filing the statement of affairs, and the penalties incurred in default of filing the document),(iii) requirement for funds to be deposited with the trustees in accordance with s 161B Bankruptcy Act, and(c) a letter enclosing a number of questionnaires to be completed by the appellant dealing with his personal and financial affairs.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

COLLIER J
The appellant lodged a fresh statement of affairs on 2 February 2005. This statement of affairs was accepted by ITSA. It follows from s 149 Bankruptcy Act that the appellant’s bankruptcy commenced 2 February 2005.THE DECISION OF THE FEDERAL MAGISTRATE The case before the learned Federal Magistrate turned on the application of s 33A Bankruptcy Act. This section reads as follows:‘(1) [Application] This section applies to a statement of affairs that was filed for the purposes of ss 54, 55, 56B 56F of 57 by a bankrupt, or a person who later became a bankrupt.(2) [Reasonable grounds] If the Court is satisfied that the person believed, on reasonable grounds, that the statement had already been filed at a time before it was actually filed, the Court may order that the statement is to be treated as having been filed at a time before it was actually filed.(3) [30-day period] The Court cannot make an order that would result in the person being discharged from bankruptcy earlier than 30 days after the order is made.(4) [Interpretation] In this section:filed includes presented, lodged or given.’ As noted by the Federal Magistrate, s 33A came into force on 5 May 2003. The section applies to Statements of Affairs filed at any time, whether before or after commencement of the section (Bankruptcy Legislation Amendment Act 2002 (Cth), Sch 1, cl 204). The appellant sought two orders from the Federal Magistrates Court. First, the appellant sought an order that the appellant’s statement of affairs, accepted by ITSA on 2 February 2005, be treated as having been filed on 23 September 1998, that is the day on which the 1998 Statement of Affairs was submitted to (and rejected by) ITSA. Second, the appellant sought an order that the Court discharge him from bankruptcy forthwith. The respondent, ITSA, opposed the application. Jarrett FM dismissed the application. In summary, his Honour found as follows:(a) Section 33A(2) required his Honour to be satisfied that the appellant believed, on reasonable grounds, that the statement of affairs had been filed at a time before it was actually filed.(b) In the period between 23 September 1998 and 9 July 1999, the appellant believed, on reasonable grounds, that the 1998 Statement of Affairs had been filed on 23 September 1998.(c) After 9 July 1999 the appellant knew that the 1998 Statement of Affairs had not been accepted by ITSA. Even if the appellant had held that belief, it would not have been reasonable for him to hold that belief.(d) The appellant knew that his bankruptcy would not commence until a properly completed statement of affairs had been filed with ITSA.(e) As a result, the discretion given to the Court by s 33A(2) was not enlivened.(f) Even if the discretion given to the Court were enlivened, the Federal Magistrate held that he would be disinclined to exercise that discretion in favour of the appellant, on the basis that the appellant had been uncooperative.(g) The Federal Magistrate was of the view that the appellant would not be prevented carrying on his trade as a plumber by becoming bankrupt, including as an employee.(h) Section 306(1) Bankruptcy Act was of no assistance to the appellant, for the reason that the defects in the 1998 Statement of Affairs were so significant that the document could not be said to be a statement of affairs at all.THE APPEAL

Ratio Decidendi

Legal Principle Established

Established by: COLLIER J

Full text does not contain this section.