YARWOOD & SHORE

[2013] FCCA 2114

FEDERAL CIRCUIT COURT OF AUSTRALIA

YARWOOD & SHORE [2013] FCCA 2114

Catchwords:
FAMILY LAW – Property – where applicant has become bankrupt since the proceedings commenced – where trustee not notified in writing – application stayed under Bankruptcy Act 1966 (Cth) sub-s.60(2).

CHILD SUPPORT – Enforcement – debt owed to the Commonwealth.

PRACTICE AND PROCEDURE – Stay – parties directed to notify trustee in writing.

Legislation:

Bankruptcy Act 1966 (Cth), ss.58, 60

Child Support (Assessment) Act 1989 (Cth), s.116
Child Support (Registration and Collection) Act 1988 (Cth), ss.30, 113A

Family Law Act 1975 (Cth), s.90SM

Applicant: MR YARWOOD

Respondent: MS SHORE

File Number: SYC 2033 of 2012

Judgment of: Judge Scarlett

Hearing date: 6 November 2013

Date of Last Submission: 6 November 2013

Delivered at: Sydney

Delivered on: 6 November 2013

REPRESENTATION

Solicitors for the Applicant: In person

Solicitors for the Respondent: In person

ORDERS

UNTIL FURTHER ORDER

1. The Amended Application filed on 18 March 2013 is stayed by virtue of subsection 60(2) of the Bankruptcy Act 1966 (Cth).

2. Within seven (7) days of the date of this Order the Applicant must advise his trustee in bankruptcy of this Application and seek an election in writing from the trustee to either prosecute or discontinue this Application.

3. Within seven (7) days of the date of this Order the Respondent must forward to the Applicant’s trustee in bankruptcy being Mr S at (omitted) a copy of her Response and supporting affidavit of 31 May 2013.

4. The Application is adjourned to Monday 16 December 2013 for further mention at 10:00 am.

IT IS NOTED that publication of this judgment under the pseudonym Yarwood & Shore is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 2033 of 2012

MR YARWOOD

Applicant

And

MS SHORE

Respondent

REASONS FOR JUDGMENT

Application

1. The application before the Court is an Amended Application seeking property orders under section 90SM of the Family Law Act 1975 (Cth) and an order in the nature of departure from administrative assessment of child support under section 116 of the Child Support (Assessment) Act 1989 (Cth).

2. The Respondent has filed a Response in which she seeks certain property orders and also seeks orders in the way of enforcement of arrears of child support under a child support assessment.

3. The Respondent also seeks in the property orders certain payments to her of moneys which she claims are owing to her by way of reimbursement and also an amount of some $80,000.00 owed to her parents.

4. The Respondent’s application to enforce payment of arrears of child support payments may have some difficulties, in that the child support is a debt owed to the Commonwealth, as set out in s. 30 of the Child Support (Registration and Collection) Act 1988 (Cth). It appears that the procedure under s.113A of that Act to enforce the child support debt has not been complied with.

5. Enforcement, in these circumstances, without a payee complying with the requirements of s.113A, remains the responsibility of the Child Support Registrar.

6. However, that situation is somewhat academic in view of the significant change in the Applicant’s circumstances that has occurred since this matter was last before the Court.

7. The Applicant disclosed in his affidavit sworn on 1 November 2013 that he has become bankrupt as a result of a creditor’s petition brought by the Australian Taxation Office claiming a debt of approximately $165,000.00. Quite properly, he annexes to his affidavit a certificate of appointment of trustee setting out the name and postal address of his trustee in bankruptcy. The trustee was appointed on 12^th June 2013.

The Effect of Bankruptcy on Property and Proceedings

1. Under subsection 58(1) of the Bankruptcy Act 1966 (Cth) the property of the bankrupt vests forthwith in the trustee. The subsection provides:

   Subject to this Act, where a debtor becomes a bankrupt:

   (a)     the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and

   (b)     after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.

2. A further difficulty is that the Application is stayed because of the bankruptcy. Under s.60(2) of the Act:

   An action commenced by a person who subsequently becomes bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes an election, in writing, to prosecute or discontinue the action.

3. Again, under subsection 60(3):

   If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.

4. At this stage it appears that the Applicant’s trustee has not received the appropriate notification of these proceedings and, therefore, the time for him to make an election, either to proceed or not to proceed, is yet to commence.

5. In any event, as I said, the bankrupt’s property vests in the trustee under the provisions of s.58 of the Bankruptcy Act 1966. Under s.58(3) of the act, after a person has become bankrupt it is not competent for a creditor to enforce any remedy in respect of a provable debt, or to commence any legal proceeding or take any fresh step in a proceeding without leave of the Court.

Directions

1. What needs to be done is for both parties to give a written notice to the trustee of the Applicant’s bankrupt estate about this proceeding and what they seek from it. The fact is that, by operation of law, the proceeding is stayed and the Application will be adjourned until after the period of time provided by the Bankruptcy Act 1966 for the notification of the trustee. After the statutory 28 days allowed to the trustee by subsection 60(3) of the Act, the trustee will elect one way or the other.

2. I will make orders accordingly.

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Date:  9 December 2013