Wood v Prentice - [2001] FCA 1050

FEDERAL COURT OF AUSTRALIA
Wood v Prentice [2001] FCA 1050
BANKRUPTCY – notice of objection to discharge from bankruptcy – whether a notice of objection complied with Bankruptcy Act 1966 (Cth) s 149 – objection to form and substance of notice – requirement to refer to evidence or other material establishing objection – requirement that copy of notice of objection given to bankrupt together with a notice setting out the bankrupt’s options for review – formal defect or irregularity – requirement to state reasons for objecting to discharge
Bankruptcy Act 1966 (Cth) ss 149, 149C, 149F, 306
Van Reesema v Official Receiver in Bankruptcy (1983) 50 ALR 253 considered
Re Hall (1994) 14 ASCR 488 distinguished
Re Graeme John Harris [1997] FCA 627 considered
Minister for Immigration and Multicultural Affairs v Gutierrez [1999] FCA 990 cited
Wimalaweera v Minister for Immigration and Multicultural Affairs [1999] FCA 1823 cited
Thirunavukkarasu v Minister for Immigration and Multicultural Affairs [2001] FCA 551 cited
Re Ansett; Ex parte Ansett v Pattison (1995) 56 FCR 526 distinguished
IN THE MATTER OF RICHARD BOYNE WOOD
RE: RICHARD BOYNE WOOD
EX PARTE: RICHARD BOYNE WOOD v MAXWELL WILLIAM PRENTICE
N 7180 OF 2001
TAMBERLIN J
SYDNEY
3 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

7180 OF 2001

IN THE MATTER OF RICHARD HERBERT BOYNE WOOD

RE:

RICHARD HERBERT BOYNE WOOD
BANKRUPT

EX PARTE:

RICHARD HERBERT BOYNE WOOD
APPLICANT

MAXWELL WILLIAM PRENTICE
RESPONDENT

JUDGE:

TAMBERLIN J

DATE:

3 AUGUST 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT

By application filed on 9 April 2001, Mr Wood seeks a declaration that the notice of objection to his discharge from bankruptcy dated 31 August 1999, filed with the Official Receiver is invalid and is of no force and effect and an order that it be set aside.
Mr Wood is a barrister practising in New South Wales. He was admitted as a Barrister of the Supreme Court in 1963. He was made bankrupt on 20 August 1996 and he filed a statement of affairs dated 31 August 1996. The statement of affairs shows assets of $7,875.89 and liabilities of $505,607.33. But for the notice of objection he would have been discharged from bankruptcy on 31 August 1999.
Mr Wood gave evidence that on or about 31 August 1999 he received a letter from Prentice Parbery Barilla (“PPB”) enclosing a notice of objection to discharge from bankruptcy by the trustee, Mr M Prentice. The letter stated that there was also enclosed a notice setting out Mr Wood’s options relating to the objection notice in accordance with s 149F(1)(a) of the Bankruptcy Act 1966 (Cth) (“the Act”). Mr Wood says that, although he received the options notice at that time, he does not recollect receiving the notice of objection to discharge with the letter. He says that on 2 September 1999, he telephoned Mr D Rose of PPB and informed him of this. He then received a facsimile dated 2 September 1999, which is a copy of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FCA 1050
Decision Date: 3 AUGUST 2001

CaseChat Overview and Summary

The case of Wood v Prentice involved a dispute between the bankrupt, Mr Wood, and the trustee, Prentice. The crux of the matter was whether the trustee's notice of objection to the bankrupt's discharge was valid. The trustee objected to the discharge on the grounds that Mr Wood had failed to pay a certain amount during the relevant assessment periods. The issue before the court was whether the trustee's notice of objection complied with the statutory requirements under section 149C(1)(c) of the relevant legislation, which mandates that the trustee must provide written reasons for the objection.

The court had to determine whether the trustee's reasons for objecting to the discharge were sufficient. The trustee argued that his reasons were adequate, as he anticipated that Mr Wood would continue to practice and generate further income, which would help in paying off the outstanding liabilities. The bankrupt, on the other hand, contended that the reasons should directly support the ground for the objection, which was the failure to pay the amount during the assessment periods. The bankrupt claimed that the trustee's reasons were speculative and not directly related to the past conduct of failing to pay the amount.

The court found that the trustee's reasons were sufficient for the purposes of the objection. The court reasoned that the trustee's anticipation of future income being available to pay off the bankrupt's debts was relevant to the objection as it demonstrated the potential benefit to creditors if the discharge was not granted. The court held that the reasons provided by the trustee did relate to the failure to pay the amount, as they were based on the anticipated future income that would help satisfy the outstanding liabilities. Consequently, the court concluded that the trustee's notice of objection was valid.

In conclusion, the court found that the trustee's notice of objection was in compliance with the statutory requirements. The court directed the bankrupt to provide Short Minutes to give effect to the reasons and scheduled further hearings to address the costs and the appropriate date of discharge.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

TAMBERLIN J

This statement, in my opinion, satisfies the requirement to state reasons set out in s 149C(1)(c). It is apparent that the trustee formed the view that there will be a benefit to the creditors in the event that Mr Wood continues to practice for a further five assessment periods and that this was the basis for the objection to discharge. In my view, this is a sufficient statement of his reasons for making the objection. It is submitted for the bankrupt that, in order to satisfy the subsection, it is necessary that the reasons should support the discharge on the ground relied on. It is said that the reasons in the present case relate to future possibilities whereas the ground relied upon concerns past conduct in failing to pay an amount in respect of which the bankrupt was liable. I do not accept this. The substance of the reason disclosed does relate to the failure to pay the amount because the trustee anticipates that if there is no discharge then further income will become available to satisfy the outstanding liabilities of the bankrupt, which include those assessed for the two CAP Years relied on.CONCLUSION Having regard to the foregoing, I am satisfied that the notice of objection is invalid and I am prepared to make appropriate declarations. I will make no order at this stage but direct the bankrupt to provide Short Minutes to give effect to these reasons at a time to be arranged with my Associate. I will hear the parties on costs and on any question as to the appropriate date of discharge.

Ratio Decidendi

Legal Principle Established

Established by: TAMBERLIN J

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	7180 OF 2001

JUDGE:	TAMBERLIN J
DATE:	3 AUGUST 2001
PLACE:	SYDNEY