Mann v Condon

Federal Court of Australia|2016-05-18|Before: Moshinsky J

The questions that were ordered to be heard separately be answered as follows: (a) As to the first question: The references to an objection being "cancelled" in s 149A(3) of the Bankruptcy Act 1966 (Cth) (the Act) are to a cancellation which has taken effect under s 149N(2) of the Act. It follows that, in the circumstances of this case, the objection dated 25 February 2015 was not "cancelled" for the purposes of s 149A(3) until the end of the period within which an application could have been made to the Administrative Appeals Tribunal for review of the cancellation decision of the Inspector-General (namely, 13 November 2015). It also follows that s 149A(3)(b) did not operate to discharge the applicant from bankruptcy because, as at 13 November 2015, another objection to discharge was in effect (namely, the objection dated 10 November 2015) and thus the requirement in sub-paragraph (ii) of s 149A(3)(b) was not satisfied. (b) As to the second question: Inappropriate to answer.
Costs be reserved.
The matter be listed for directions on a date to be fixed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 In 2011, a sequestration order was made against the applicant (Ms Mann) and the respondent (the Trustee) was appointed the trustee in bankruptcy. 2 Ordinarily, Ms Mann would have been discharged from bankruptcy by operation of law on 9 March 2015, this being 3 years from the date on which she filed her statement of affairs. 3 However, on 25 February 2015, the Trustee filed an objection to discharge of bankruptcy (the First Objection). The effect of this was to extend the duration of the bankruptcy to 9 March 2020, being 8 years from the date on which Ms Mann filed her statement of affairs. 4 On 15 October 2015, the First Objection was cancelled by a delegate of the Inspector-General in Bankruptcy. 5 On 10 November 2015, the Trustee filed a second objection to discharge of bankruptcy (the Second Objection). 6 The main issue to be considered in these reasons is whether, on the true construction of the relevant provisions of the Bankruptcy Act 1996 (Cth) (the Act), Ms Mann was discharged from bankruptcy before the Trustee filed the Second Objection (and hence there was no power to file that objection). Ms Mann contends that, on the true construction of the Act, she was discharged from bankruptcy on 15 October 2015 (or earlier) upon the cancellation of the First Objection by the Inspector-General. The Trustee contends that the cancellation of the First Objection did not have effect until the end of the period within which an application could be made to the Administrative Appeals Tribunal (the AAT) for the review of the cancellation decision (a period of 28 days, which ended on 13 November 2015); and that, as the Second Objection was filed before the end of that period, the effect of the filing of the objection was to maintain the extension of the duration of the bankruptcy to 9 March 2020, being 8 years from the date on which Ms Mann filed her statement of affairs. 7 For the reasons set out below, I consider the Trustee's construction of the relevant provisions to be correct.

The proceeding 8 By this proceeding, Ms Mann invokes the supervisory jurisdiction of this Court under s 178 of the Act to challenge the decision of the Trustee to file the Second Objection. In the application, the final orders sought by the applicant are as follows: On the grounds stated in the supporting affidavit or statement of claim, the applicant seeks the following orders under section 178 of the Bankruptcy Act 1966 (Cth) … 1. the objection to the discharge from bankruptcy QLD 2420/11/0 of the applicant filed by the respondent with the Official Receiver in Bankruptcy on or about 10 November 2015 be declared invalid and set aside; 2. the applicant be discharged from bankruptcy QLD 2420/11/0 from 9 March 2015 (or such other date as the Court deems fit); 3. the respondent pay the applicant's costs of this proceeding.

The separate questions 9 At the first case management conference in this matter, an order was made for the separate hearing of certain questions (see r 30.01(1) of the Federal Court Rules 2011) on the basis that, depending on how these questions were determined, it may obviate the need for a lengthy, fact-intense hearing. The order was in the following terms: The matter be listed for hearing on a date to be fixed, on an estimate of half a day, … in relation to: a. the issue of statutory construction raised by the Applicant concerning the interaction between ss 149A and 149N of the Bankruptcy Act 1966 (Cth) and whether the Applicant is already discharged from bankruptcy; and b. the Applicant's challenge on judicial review grounds to the decision of the Respondent to lodge the second objection. 10 The questions were given further definition by the submissions made on behalf of Ms Mann, both at the case management conference and the hearing of the separate questions. Her submissions can be summarised as follows: (a) In relation to the first question, Ms Mann submits that there is an apparent inconsistency between s 149A and s 149N of the Act, and that the apparent inconsistency can and should be resolved in one of two ways: (i) Ms Mann's first argument is that the apparent inconsistency can be resolved if s 149N(2) is interpreted as operating in circumstances where a trustee actually applies to the AAT for review of the Inspector-General's cancellation decision. On this interpretation, Ms Mann was discharged from bankruptcy on 15 October 2015 (when the Inspector-General decided to cancel the First Objection), unless the Trustee applied for review within 28 days, which he did not do. It follows that she was discharged on 15 October 2015 and the Trustee did not have power to file the Second Objection. (ii) Ms Mann's second argument is that the period in s 149(4) is taken to be the relevant period in s 149A(2) if an objection takes effect, but if it is withdrawn or cancelled, the objection is taken never to have been made, in other words the period in s 149(4) reverts to 3 years. In the present case, as the Inspector-General cancelled the First Objection, the First Objection is taken never to have been made, and Ms Mann's period of bankruptcy was not extended. It follows that she was discharged on 9 March 2015 and the Trustee did not have power to file the Second Objection. (b) In relation to the second question, Ms Mann submits that the Trustee's 'remedy' upon the Inspector-General's cancellation of the First Objection was to seek review by the AAT. Ms Mann submits that it is an abuse of the objection procedure to refrain from seeking a review of the Inspector-General's cancellation and instead to lodge a second objection during the 'extended' period, relying on: a ground that is the same as a ground rejected by the Inspector-General in the cancellation of the First Objection; and conduct that occurred during the extended period. 11 For the reasons set out below, I conclude that the separate questions should be answered as follows: (a) As to the first question: The references to an objection being "cancelled" in s 149A(3) of the Act are to a cancellation which has taken effect under s 149N(2) of the Act. It follows that, in the circumstances of this case, the objection dated 25 February 2015 was not "cancelled" for the purposes of s 149A(3) until the end of the period within which an application could have been made to the AAT for review of the cancellation decision of the Inspector-General (namely, 13 November 2015). It also follows that s 149A(3)(b) did not operate to discharge Ms Mann from bankruptcy because, as at 13 November 2015, another objection to discharge was in effect (namely, the objection dated 10 November 2015), and thus the requirement in sub-paragraph (ii) of s 149A(3)(b) was not satisfied. (b) As to the second question: Inappropriate to answer.

Facts 12 There was no dispute about the facts relevant to the separate questions. The main facts may be briefly stated as follows. It is convenient to include reference to the relevant statutory provisions in the course of setting out these facts. 13 On 25 May 2011, a sequestration order was made against Ms Mann (also known as Ms King) and the Trustee was appointed the trustee in bankruptcy. 14 On 8 March 2012, Ms Mann filed her statement of affairs. If no objection had been filed, Ms Mann would have been discharged from bankruptcy by operation of law at the end of the period of 3 years from the date on which she filed her statement of affairs (s 149(4)). The parties proceeded on the basis that this was 9 March 2015. (It may be that the date is 8 March 2015, but nothing turns on this, and I will proceed on the basis that the date is 9 March 2015.) 15 On 25 February 2015, the Trustee filed the First Objection with the Official Receiver, pursuant to s 149B(1) of the Act. The effect of this was to extend the period of bankruptcy such that Ms Mann would be discharged at the end of the period of 8 years from the date on which she filed her statement of affairs (s 149A(1), (2)). The parties proceeded on the basis that this date was 9 March 2020. There were three grounds of objection set out in the document. The first ground of objection, and the evidence in support of it, were as follows: A. GROUNDS OF OBJECTION 1. Section 149D(1)(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" I advise that pursuant to Section 149D(1)(d) of the Act, Ms King has the obligation and responsibility to disclose to me any and all information regarding her property, income or expected income when requested in writing by the Trustee. However, Ms King has failed to comply with her abovementioned obligations. Particularly, Ms King failed to provide me with details of her income, including the completion and return of all her Income Questionnaires for the Bankruptcy Period. Further, my investigations have revealed that Ms King is the widow of the late Peter Harry Mann who operated an investment property business via Sails Consulting Services Gold Coast Pty Ltd A.C.N. 098 810 498 ('Sails Consulting') prior to his demise in 2005. Upon the death of her husband, Ms King became the beneficial owner of Sails Consulting. In this regard, despite my correspondence sent to Ms King requesting information in relation to her interest in Properties registered in the name of her late husband and Sail (sic) Consulting (Annexure "G"), Ms King failed to provide me with sufficient information to establish the Estate's Interests in the Properties she owned and associated with. In addition to the above demands, my staff members have attempted to contact the Bankrupt via telephone and have either left messages for the Bankrupt to call this office or alternatively the telephone rang out. … B. EVIDENCE USED TO ESTABLISH GROUNDS … Annexure "G": A copy of email attached a Letter to Ms King dated 2 July 2013 requesting information in relation to her assets, examinable affairs, and incomes. No response was received from Ms King to date. A copy of Company Search of Sails Consulting Services Gold Coast Pty Ltd. A copy of Land Title Search of Sails Consulting Services Gold Coast. A copy of Land Title Search of the late Peter Harry Mann

16 On 3 July 2015, Ms Mann applied for internal review of the First Objection by the Inspector-General, pursuant to s 149K of the Act. 17 A delegate of the Inspector-General conducted a review of the Trustee's decision to file the First Objection and, on 15 October 2015, decided to cancel all grounds of objection contained in the First Objection, pursuant to s 149N of the Act. 18 It was open to the Trustee to apply to the AAT for review of the decision of the Inspector-General to cancel all grounds of objection in the First Objection (see s 149Q of the Act). The time for bringing any such application was 28 days after the day on which the document setting out the terms of the decision was given to the Trustee (see s 29 of the Administrative Appeals Tribunal Act 1975 (Cth)). It was common ground at the hearing that this 28-day period ended on 13 November 2015. The Trustee did not file an application for review by that date (or subsequently). 19 On 10 November 2015 (being 3 days before the end of the 28-day period in which an application for review could be brought), the Trustee filed the Second Objection with the Official Receiver, pursuant to s 149B(1) of the Act. Ms Mann became aware of the Second Objection on 18 November 2015. There were two grounds of objection set out in the document. The second ground, and the evidence in support of it, were as follows: A. GROUNDS OF OBJECTION … 2. Section 149D(1)(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" I advise that pursuant to Section 149D(1)(d) of the Act, Ms King has the obligation and responsibility to disclose to me any and all information regarding her property, income or expected income when requested in writing by the Trustee. Particularly, my investigations have revealed that Ms King is the widow of the late Peter Harry Mann who operated an investment property business via Sails Consulting Services Gold Coast Pty Ltd A.C.N. 098 810 498 ('Sails Consulting') prior to his demise in 2005. Upon the death of her husband, Ms King became the sole beneficial owner of Sails Consulting. In this regard, my correspondence was sent to Ms King and Ms King's Solicitor, B2B Lawyers, requesting an accounting of Ms King's administration of the Deceased Estate of Peter Harry Mann (Annexure "D"). Ms King has failed to provide me with such accounting of her executorship of her late husband's Deceased Estate of which she is the sole executrix and sole beneficiary. B. EVIDENCE USED TO ESTABLISH GROUNDS … Annexure "D": A copy of email attached a Letter to Ms King dated 2 July 2013 requesting information in relation to her assets, examinable affairs, and incomes. I advise that to date, Ms King failed to provide such information to my office. A copy of correspondence dated 15 June 2015 and 30 July 2015 to B2B Lawyers requesting an accounting of Ms King's administration of the Deceased Estate of the late Peter Harry Mann. I advise that to date, Ms King failed to provide such information to my office. A copy of Company Search of Sails Consulting Services Gold Coast Pty Ltd. A copy of Land Title Search of Sails Consulting Services Gold Coast. A copy of Land Title Search of the late Peter Harry Mann

Section 178 of the Act 20 As noted above, Ms Mann invokes the jurisdiction of the Court under s 178 of the Act. That section provides as follows: 178 Appeal to Court against trustee's decision etc. (1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable. (2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision. 21 Section 178 confers a supervisory jurisdiction over the conduct of the trustee: Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 132 per Brennan CJ, Gaudron and McHugh JJ. The section confers a power on the Court to "in substance" review the decision of the trustee: McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547 at 552-553 per Northrop, Ryan and O'Loughlin JJ; Macchia v Nilant (2001) 110 FCR 101 at [38] per French J (as his Honour then was). The power is necessarily judicial: Re Wheeler; ex parte Wheeler v Halse (1994) 54 FCR 166 at 170 per Lee J; Macchia v Nilant (2001) 110 FCR 101 at [38] per French J. In Macchia v Nilant, French J held that the availability of an administrative mechanism to review the trustee's decision to file an objection should not be taken as manifesting, by implication, a legislative intention to preclude challenge under s 178: Macchia v Nilant (2001) 110 FCR 101 at [40]. See also Frost v Sheahan (2009) 6 ABC(NS) 786; [2009] FCAFC 20 at [8] per Ryan, Mansfield and Jagot JJ; BDT Holdings Pty Ltd v Piscopo [2009] FCA 151 at [5] per Rares J.

Legislative provisions 22 The relevant provisions, for the purposes of the separate questions, are contained in Pt VII, Div 2 of the Act, which comprises ss 149-149Q. Part VII is headed 'Discharge and Annulment' and Div 2 is headed 'Discharge by operation of law'. The key relevant provisions are ss 149, 149A, 149B, 149G and 149N, which provided as follows: Subdivision A - Discharge after certain period 149 Automatic discharge (1) Subject to section 149A, a bankrupt is, by force of this subsection, discharged from bankruptcy in accordance with this section. (2) If: (a) the bankrupt became a bankrupt before the commencement of section 27 of the Bankruptcy Amendment Act 1991; and (b) immediately before the commencement of that section, either: (i) paragraph 149(3)(c) of the Bankruptcy Act 1966 as amended applied in relation to the bankrupt; or (ii) an order under subsection 149(8) or (12) of the Bankruptcy Act 1966 as amended was in force in relation to the bankrupt; the bankrupt is discharged at the end of the period of 3 years from: (c) the date on which the bankrupt filed his or her statement of affairs; or (d) the date of commencement of that section; whichever is the later. (3) If the bankrupt became a bankrupt before the commencement of section 27 of the Bankruptcy Amendment Act 1991, and subsection (2) does not apply in relation to the bankrupt, the bankrupt is discharged at: (a) the end of the period of 3 years from the date on which the bankrupt filed his or her statement of affairs; or (b) the commencement of that section; whichever is the later. (4) If the bankrupt becomes a bankrupt after the commencement of section 27 of the Bankruptcy Amendment Act 1991, the bankrupt is discharged at the end of the period of 3 years from the date on which the bankrupt filed his or her statement of affairs. 149A Bankruptcy extended when objection made (1) If an objection to the discharge of a bankrupt has taken effect in accordance with section 149G, then, unless the objection is withdrawn or cancelled, the reference in whichever of subsections 149(2), (3) and (4) applies in relation to the bankrupt to the period of 3 years from the date on which the bankrupt filed his or her statement of affairs is taken to be a reference to the prescribed number of years from the prescribed date. (2) For the purposes of subsection (1): (a) the prescribed number of years is: (i) if the objection was made on a ground, or on grounds that included a ground, referred to in paragraph 149D(1)(ab), (ac), (ad), (d), (da), (e), (f), (g), (h), (ha), (ia), (k) or (ma) - 8 years; or (ii) in any other case - 5 years; and (b) the prescribed date is: (i) if the objection was made on a ground, or on grounds that included a ground, referred to in paragraph 149D(1)(a) or (h) - the date on which the bankrupt returned to Australia; or (ii) in any other case - the date on which the bankrupt filed his or her statement of affairs. (3) If the objection is withdrawn or cancelled: (a) the objection is taken never to have been made; and (b) if: (i) the period specified in whichever of subsections 149(2), (3) and (4) applies in relation to the bankrupt has ended; and (ii) no other objection against the discharge of the bankrupt is in effect; the bankrupt is taken to be discharged under section 149 immediately the objection is withdrawn or cancelled. Subdivision B - Objections 149B Objection to discharge (1) Subject to the following provisions of this Subdivision, at any time before a bankrupt is discharged from bankruptcy under section 149, the trustee may file with the Official Receiver a written notice of objection to the discharge. (2) The trustee of a bankrupt's estate must file a notice of objection to the discharge if the trustee believes: (a) that doing so will help make the bankrupt discharge a duty that the bankrupt has not discharged; and (b) that there is no other way for the trustee to induce the bankrupt to discharge any duties that the bankrupt has not discharged. … 149G Date of effect of objection An objection takes effect at the beginning of the day on which details of the notice of objection are entered in the National Personal Insolvency Index. … Subdivision C - Review of objection … 149N 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. (Emphasis added.)

The first question 23 The first question raises an issue of statutory interpretation. The principles applicable to the task of statutory interpretation are well established. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, Hayne, Heydon, Crennan and Kiefel J stated at [47]: This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. (Footnotes omitted.) See also Alcan at [4] per French CJ; Roadshow Films Pty Ltd v iiNet Ltd (2012) 248 CLR 42 at [22] per French CJ, Crennan and Kiefel JJ; Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500 at [41] per French CJ and Crennan J; Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ. 24 A particular issue of statutory interpretation that arises in this case is asserted inconsistency between provisions of the one statute. In relation to this issue, in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, McHugh, Gummow, Kirby and Hayne JJ said at [69]-[71]: 69 The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. 70 A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. 71 Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. In The Commonwealth v Baume, Griffith CJ cited R v Berchet to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent". (Footnotes omitted.) 25 Ms Mann submits that there is an apparent inconsistency between ss 149A and 149N of the Act. She submits that the inconsistency is exposed when one asks the question: if an objection is cancelled by the Inspector-General, is the bankrupt taken to be discharged immediately (as s 149A(3) would seem to provide) or does the cancellation only take effect after the expiration of the 28-day AAT review period (as s 149N(2) would seem to provide)? Ms Mann submits that the apparent inconsistency between ss 149A and 149N can and should be resolved in one of two ways. 26 Ms Mann's first argument is that the apparent inconsistency between the sections can be resolved if s 149N(2) is interpreted as operating only in circumstances where as trustee actually applies to the AAT for review of the Inspector-General's cancellation decision. On that construction, s 149N(2) is merely a facultative provision to give the trustee an opportunity to consider applying for a review (s 149N(2)(a)) and, if a review is applied for, to enable the AAT to perform such review (s 149N(2)(b)) without the Inspector-General's cancellation decision resulting in the discharge of the bankrupt such that the review is rendered nugatory. Absent an application for review, however, Ms Mann contends that s 149N(2) has no operation; it does not extend the period of bankruptcy in and of itself. 27 Ms Mann submits that, on this interpretation, on 15 October 2015, when the delegate of the Inspector-General decided to cancel the First Objection, Ms Mann was discharged there and then by operation of law, unless the Trustee applied for a review within 28 days, which he did not do. 28 Hence, on this interpretation, Ms Mann submits, the Second Objection was filed at a time when Ms Mann already stood discharged by operation of law. The Second Objection should therefore be declared invalid and set aside under s 178 of the Act. 29 Put another way, Ms Mann submits that the intent of s 149N(2) is to preserve the trustee's right to seek review in the AAT of the Inspector-General's cancellation decision. It is not the intent of s 149N(2) to afford the trustee an opportunity to use the 28-day AAT review period, not to apply for review of the cancellation decision, but to file a new objection after the cancellation of the existing objection, thereby extending the bankruptcy period by a different means. 30 Ms Mann's second argument (in relation to the first question) has a number of steps: (a) Section 149 relevant provides: (1) Subject to section 149A, a bankrupt is, by force of this subsection, discharged from bankruptcy in accordance with this section. … (4) If the bankrupt becomes a bankrupt after the commencement of section 27 of the Bankruptcy Amendment Act 1991, the bankrupt is discharged at the end of the period of 3 years from the date on which the bankrupt filed his or her statement of affairs. (b) Section 149A modifies the operation of s 149, by way of deeming provisions affecting the period of discharge in s 149(1), if the trustee files an objection to discharge "at any time before the bankrupt is discharged under section 149" (s 149B(1)). (c) The deeming provisions in s 149A operate as follows: (i) "If an objection to the discharge of a bankrupt has taken effect", the period of 3 years in s 149(4) is "taken to be" the prescribed period "unless the objection is withdrawn or cancelled" (s 149A(1)); (ii) the prescribed period is 5 years or 8 years depending upon the grounds of objection (s 149A(2)); (iii) if an objection is withdrawn or cancelled, the objection is "taken never to have been made" (s 149A(3)(a)) "and", if the period specified in s 149(4) has ended and no other objection is "in effect", the bankrupt is "taken to be discharged under section 149 immediately the objection is withdrawn or cancelled" (s 149A(3)(b)). 31 Ms Mann submits that the period in s 149(4) is "taken to be" the relevant period in s 149A(2) if an objection takes effect, but if it is withdrawn or cancelled, the objection is "taken never to have been made", in other words the period in s 149(4) reverts to 3 years. She submits that s 149A(3)(b) could have provided that the bankrupt "is discharged" immediately the objection is withdrawn or cancelled, but instead provides that the bankrupt is "taken to be discharged under section 149". Similarly, s 149B(1) could have referred to the trustee filing an objection "at any time before the bankrupt is discharged" but instead refers to "discharged under section 149". 32 It follows from the above, Ms Mann submits, that the references in ss 149B(1) and 149A(3) to discharge under s 149 refer to discharge before an objection is lodged or after an objection has been withdrawn or cancelled, and therefore mean discharge at the end of the period of 3 years in s 149(4). 33 In support of this (second) argument, Ms Mann also submits that s 149B(1) is not intended to allow a trustee to file further objections during the extended period brought about by filing of a prior objection. If the prior objection is cancelled and taken never to have been made, it follows that the period of 3 years ought never to have been extended so as to enable the filing of the subsequent objection. 34 Ms Mann submits that this interpretation is supported by the Explanatory Memorandum to the Bankruptcy Amendment Bill 1991 (Cth), being the Bill for the Act which introduced ss 149A-149Q. Paragraph 27.12 of the Explanatory Memorandum, which relates to proposed s 149B, includes the following statement: Proposed section l49B will empower the trustee or the Official Receiver to object to the discharge of a bankrupt at any time before the bankrupt is automatically discharged under proposed section 149, that is, before 3 years has elapsed from the date on which the bankrupt filed his or her statement of affairs. 35 Ms Mann drew the Court's attention to the decision of von Doussa J in Re Kotses (1995) 132 ALR 409 at 410-411 which is arguably contrary to her second argument. She submits that the case is distinguishable as it concerned withdrawal rather than cancellation of an objection. Alternatively, she submits it was wrongly decided in that it construed the word, "and" in s 149A(3) to be disjunctive. She also drew attention to the fact that in some cases the Court had proceeded on the assumption that an objection could validly be filed after the end of the 3 year bankruptcy period, referring to the fourth objection considered in Frost v Sheahan (2005) 220 ALR 733 and the fifth objection considered in Frost v Sheahan (2008) 249 ALR 538. She submits that, to the extent that these cases upheld objections filed after the end of the 3 year bankruptcy period, it is not apparent from the reasons that the point Ms Mann raises was argued. 36 Applying the second argument to the present case, Ms Mann submits that the Inspector-General decided that the First Objection was ill-founded and cancelled it; it follows that the First Objection is taken never to have been made, Ms Mann was discharged from bankruptcy by operation of law on 9 March 2015, and therefore the Second Objection was not validly filed. 37 In response, the Trustee submits that there is no inconsistency between ss 149A and 149N of the Act. Section 149A(1) makes provision for bankruptcy to be extended when an objection is made, "unless the objection is withdrawn or cancelled". Relevantly, s 149A(3) then contemplates the effect of an objection being withdrawn or cancelled on the ultimate discharge of the bankrupt. The Trustee submits that s 149A(3)(a) makes a broad statement as to the legal effect of the withdrawal or cancellation, namely that "the objection is taken never to have been made". However, the Trustee submits, it is only if sub-paragraph (i) and (ii) of s 149A(3)(b) are satisfied that "the bankrupt is taken to be discharged under section 149 immediately the objection is withdrawn or cancelled". The Trustee submits that these sub-paragraphs contemplate a further objection delaying the discharge of the bankrupt. It necessarily follows, the Trustee submits, that they also preserve the rights which exist while the bankruptcy remains on foot. 38 As to the date of discharge, the Trustee submits that the words of the statute - "immediately the objection is withdrawn or cancelled" - are subject to any definition or other provision of the Act concerning when those matters (namely, withdrawal or cancellation) are taken to have occurred. Section 149A should be read as being consistent with the Act. The Trustee submits that the meaning and timing of "cancellation" for the purposes of s 149A is prescribed by the Act, as s 149N squarely addresses when a cancellation takes effect in the context of the Inspector-General cancelling an objection. 39 The Trustee submits that s 149N(2) makes provision for two different, alternate and clearly identified periods of time. Relevantly, s 149N(2)(a) provides that a cancellation does not take effect until the end of the period within which an application may be made to the AAT for a review of the decision. This time extension, the Trustee submits, is not subject to the application actually being made. It is submitted that this interpretation is informed by what follows in paragraph (b) of s 149N(2), which provides for a time limit if an application is actually made. 40 The Trustee submits that, if it were the intention of Parliament that the time for cancellation prescribed in s 149N(2)(a) was contingent on an application actually being made, then this would have been so expressed. On the contrary, read together, paragraphs (a) and (b) of s 149N(2) create two time periods for the cancellation to take effect. Both paragraphs have the effect of extending the bankruptcy. 41 In my view, the Trustee's construction of the relevant provisions of the Act is correct. Starting with the text of the provisions, s 149N(2) is specifically directed to the matter of when a cancellation takes effect. Similarly, the Act makes provision for when other steps take effect. In particular, s 149J deals with withdrawal of an objection and s 149J(3) provides that a withdrawal "takes effect at the beginning of the day when details of a notice under subsection (1) [of s 149J] are entered in the National Personal Insolvency Index". Returning to s 149N(2), this provides two time periods for when a cancellation of an objection takes effect. First, s 149N(2)(a) provides that the cancellation does not take effect until the end of the period within which an application may be made to the AAT for review of the decision of the Inspector-General (that is, 28 days). Secondly, s 149N(2)(b) provides that, if such an application is made, the cancellation does not take effect until the decision of the AAT is given. While the second time period is expressed to be contingent on an application to the AAT actually being made, the first time period is not. Thus, on the face of these provisions, it appears that, in any case, a cancellation does not take effect until the end of the 28-day period within which an application may be made to the AAT for review of the decision of the Inspector-General; then, if an application for review is made, the period during which the cancellation does not take effect is extended until the decision of the AAT is given. There is no suggestion in the text that the operation of s 149N(2)(a) is contingent on an application for review actually being made; moreover, the contrast with paragraph (b) suggests that the operation of paragraph (a) is not contingent. 42 The underlying rationale of a provision such as s 149N(2) is not difficult to discern. In circumstances where the legislative scheme provides for 'merits review' by the AAT of the decision of the Inspector-General to cancel an objection, the provision is designed to prevent the initial decision coming into effect (it is, in effect, stayed) to facilitate review by the AAT. Initially, the cancellation does not take effect until the end of the period in which an application for review may be brought (28 days). If no application for review is made, then the cancellation takes effect at the end of that 28 day period. However, if an application for review is made, the cancellation does not take effect until the AAT gives its decision. 43 Turning to s 149A, the section qualifies s 149 (see the opening words of s 149) and deals with the duration of bankruptcy in circumstances where an objection to discharge is filed (and takes effect). Section 149A provides for a substantial increase in the period of bankruptcy -for example, in a case such as the present, the period is increased from 3 years to 8 years from the date on which the bankrupt filed his or her statement of affairs. It has been said that the purpose of the objection procedure is to provide the trustee with a power by which he or she can induce the bankrupt to act in accordance with the bankrupt's obligations; and that the trustee should not use the power for the purpose of punishing the bankrupt for acts taken by the bankrupt which cannot be rectified; rather, the power should be used for the purpose of persuading the bankrupt to discharge the bankrupt's duties under the Act: Frost v Sheahan (2005) 220 ALR 733 at [46]-[49] per Lander J. 44 Section 149A provides, not only for the extension of the duration of bankruptcy in circumstances where an objection to discharge is filed (and takes effect), but also with the duration of bankruptcy in circumstances where an objection is later withdrawn or cancelled. This is dealt with in s 149A(3). As the opening line makes clear, the subsection operates only if an objection is withdrawn or cancelled. The subsection has two paragraphs. First, paragraph (a) provides that if the objection is withdrawn or cancelled, the objection "is taken never to have been made". Secondly, paragraph (b) sets out two cumulative requirements. If those requirements are satisfied, then "the bankrupt is taken to be discharged under section 149 immediately the objection is withdrawn or cancelled". The two requirements are as follows. The first - set out in sub-paragraph (i) - is that the period specified in s 149(2), (3) or (4) (as applicable) has ended. That is the period of the bankruptcy that would have applied but for the objection (eg, in the present case, 3 years from the date on which the statement of affairs was filed). The second requirement - set out in sub-paragraph (ii) - is that no other objection against the discharge of the bankrupt is in effect. In circumstances where an objection is withdrawn or cancelled before the end of the period of bankruptcy referred to in s 149(2), (3) or (4) (as applicable), the requirement set out in sub-paragraph (i) of s 149A(3)(b) is not satisfied, and s 149A(3)(b) does not operate. In that scenario, the period of bankruptcy simply reverts to the period specified in s 149(2), (3) or (4) (as applicable) (eg, the period of 3 years from the date of filing the statement of affairs). However, in circumstances where an objection is withdrawn or cancelled after the end of the period specified in s 149(2), (3) or (4) (as applicable), some additional provision is needed to deal with the duration of bankruptcy, and that is what s 149A(3)(b) deals with. 45 Section 149N(2) and s 149A(3) are capable of being read together. Section 149N(2) provides for when a cancellation takes effect. Section 149A(3) deals with the duration of bankruptcy in circumstances where an objection is withdrawn or cancelled - that is, where an objection is withdrawn or cancelled and the withdrawal or cancellation takes effect. In other words, the references in s 149A(3) to an objection being "cancelled" are to a cancellation which has taken effect under s 149N(2). 46 Reading the two provisions together in this way is consistent with the role which each provision plays in the statutory scheme. As discussed above, s 149N(2) is concerned with when a cancellation takes effect, and is designed to facilitate the process of review by the AAT by deferring the date upon which a cancellation takes effect; s 149A(3) is directed at a different matter, namely the duration of bankruptcy in circumstances where an objection is filed and then subsequently withdrawn or cancelled. The provisions still fulfil these functions if they are read together in the way described above. 47 It is true that the word "immediately" appears in the closing lines of s 149A(3). Reading the subsection on its own, without regard to s 149N(2), one might gain the impression that, if the requirements in sub-paragraphs (i) and (ii) of s 149A(3)(b) are satisfied, then a bankrupt is discharged from bankruptcy immediately upon a cancellation decision being made. However, the statute needs to be read as a whole, and so regard must also be had to ss 149J and 149N(2). When regard is had to those provisions, it is apparent that the reference to "immediately" is to immediately from the time that the withdrawal or cancellation takes effect. 48 It is unnecessary to decide whether paragraphs (a) and (b) of s 149A(3) are alternatives, in the sense that paragraph (a) applies to situations where an objection is withdrawn or cancelled before the period of bankruptcy in s 149(2), (3) or (4) (as applicable) has ended, and paragraph (b) applies to situations where the withdrawal or cancellation occurs after that period has ended: see Re Kotses (1995) 132 ALR 409 at 410-411. It may be that the paragraphs are cumulative, in the sense that paragraph (a) applies generally, and then paragraph (b) applies additionally if the requirements set out in sub-paragraphs (i) and (ii) are satisfied. 49 For these reasons, I do not accept that there is an inconsistency between ss 149A and 149N, as submitted by Ms Mann. To the contrary, the provisions form part of a coherent statutory scheme, with each having a particular role to play. It follows that I do not accept the first argument or the second argument advanced on behalf of Ms Mann, as summarised above. Further, in relation to the first argument, I do not accept that s 149N(2)(a) operates only in circumstances where a trustee actually applies to the AAT for review of the Inspector-General's cancellation decision; rather, as the contrast between paragraphs (a) and (b) of s 149N(2) indicates, paragraph (a) operates irrespective of whether an application for review is made. In relation to the second argument, I think this places too much emphasis on s 149A(3)(a) ("the objection is taken never to have been made") at the expense of paragraph (b) of s 149A(3), and s 149A generally. In circumstances where an objection takes effect, but is withdrawn or cancelled, the duration of bankruptcy is determined by application of s 149A as a whole. If the withdrawal or cancellation is after the end of the period referred to in s 149(2), (3) or (4) (as applicable), then the bankrupt is taken to be discharged if - but only if - the requirement in sub-paragraph (ii) of s 149A(3)(b) is satisfied. Otherwise, the period of the bankruptcy would remain that worked out under s 149A(1) and (2). 50 Applying the construction which I have accepted in paragraph [45] above to the facts of the present case, the First Objection was not "cancelled" for the purposes of s 149A(3) until the end of the period within which an application could have been made to the AAT (namely, 13 November 2015). It follows that s 149A(3)(b) did not operate to discharge Ms Mann from bankruptcy because, as at 13 November 2015, another objection to discharge was in effect (namely, the Second Objection) and thus the requirement in sub-paragraph (ii) of s 149A(3)(b) was not satisfied.

The second question 51 As noted above, the second question is given definition by the submissions made by Ms Mann as summarised in paragraph 10 above. 52 At the forefront of her submissions in relation to the second separate question is the proposition that the Second Objection is based on a ground which is substantially the same as a ground contained in the First Objection, which was cancelled by the Inspector-General; and the Trustee did not seek review of the cancellation by the AAT (as he could have done). Ms Mann relies on the overlap between the grounds extracted in paragraphs [15] and [19] above. Each of these grounds is to the effect that Ms Mann, when requested to provide written information about her interest in an investment property business known as 'Sails Consulting', which she is said to have acquired from her late husband, failed to comply with the request. In each objection, the evidence in support of the ground includes a letter dated 2 July 2013 from the Trustee to Ms Mann. 53 The Trustee submits that there is a difference between the grounds, in that the ground in the Second Objection relies on a failure to provide the information in response to letters dated 15 June 2015 and 30 July 2015 from the Trustee to Ms Mann's solicitors, as well as the letter dated 2 July 2013. Ms Mann responds to this difference by pointing out that these letters were sent during the 'extended' period of bankruptcy, namely the period during which the bankruptcy was extended by virtue of the First Objection. As that objection was ultimately set aside, she submits that it is unjust and inequitable for the Trustee to rely on acts or omissions during this extended period. 54 The second separate question was set down for hearing on the basis that it appeared to raise a point of principle that could be determined on a limited evidentiary basis and thus potentially obviate the need for a lengthy, fact-intense hearing. However, having heard the submissions on the second separate question, I consider that the preferable course is not to answer this question in isolation from the other issues that Ms Mann may wish to raise in support of her application under s 178 of the Act. 55 I note that the evidence before the Court at present is quite limited. For example, the evidence filed in relation to the separate questions does not deal with whether the Trustee followed up his request for information between the date of the letter relied upon (2 July 2013) and the date of the First Objection (25 February 2015). The evidence does not address whether, if it be the case that there was no follow-up, it was appropriate for the Trustee to wait until just before the expiry of the ordinary period of bankruptcy before filing the objection relying on this failure to provide the requested information. Further, in Ms Mann's solicitors' letter dated 3 July 2015 seeking review of the First Objection, they stated that the First Objection did not refer to correspondence dated 23 July 2013, 24 July 2013 and 23 September 2013 and therefore the objection created a false impression that Ms Mann had withheld information. In the course of the review, the Inspector-General, in a letter dated 19 August 2015, sought the Trustee's response to this contention. However, in his letter in response, the Trustee did not refer to these three letters. The evidence before the Court at present does not include the three letters or deal with whether they constitute the provision of adequate information in response to the Trustee's request. It is possible that the evidence about the matters identified in this paragraph (as well as other evidence) may have a bearing on whether or not it is appropriate to set aside the Second Objection on the basis contended for by Ms Mann under the second separate question. 56 For these reasons, I think the preferable course is not to answer the second separate question at this stage, but rather to consider the matters raised under this question as part of the overall consideration of the s 178 application.

Conclusion 57 For these reasons, I will answer the separate questions as set out in paragraph [11] above. I will reserve the costs of the separate questions at this stage and list the matter for directions to discuss the further conduct of the proceeding. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.

Bankruptcy Act 1996(Cth)

At a glance

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Before

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Judgment (11 paragraphs)

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Legislation Cited (3)

Cases Cited (14)

Cited By (1)