BANKRUPTCY - Applicant sought refund of realisations charge imposed on her estate - Applicant's request for remission was not made prior to the payment of the charge pursuant to section 283 - Respondent failed to advert to Applicant's request being out of time - this does not bind the Tribunal in the exercise of its jurisdiction - decision under review affirmed.

Re Exell and Inspector -General in Bankruptcy [2000] AATA 13; (2000) 30 AAR 320

Roberts v Repatriation Commission [1992] FCA 642; (1992) 29 ALD 442

Kuswardana v Minister for Minister for Immigration and Ethnic Affairs [1981] FCA 66; (1981) 35 ALR 186

Re Bowen and Repatriation Commission [1994] AATA 53; (1994) 32 ALD 700

By application made 24th day of October 2003, the Applicant sought review of a decision by the Respondent on 18 March 2003 not to refund to her pursuant to section 283 of the Bankruptcy Act 1966 the realisations charge imposed upon her estate pursuant to section 6 of the Bankruptcy (Estate Charges) Act 1997.

Section 283 Bankruptcy Act reads:

"1) The Inspector-General may remit an amount of interest charge, realisations charge or late payment penalty that is payable but has not been paid if the Inspector-General thinks that:

(a) failure to remit the amount would cause a person undue hardship; and

(b) it is appropriate to remit the amount.

(2) The following provisions apply in relation to remissions under subsection (1):

(a) the person liable to pay the charge or penalty may apply for a remission;

(b) an application is to be in writing, setting out the reasons for the application, and is to be made to the Inspector-General;

(c) the Inspector-General's decision on an application is to be in writing;

(d) application may be made to the Administrative Appeals Tribunal for review of a decision to refuse an application, or to remit a lesser amount than was applied for."

On 11 December 2003 a Deputy President of this Tribunal directed that the time in which to lodge with the Tribunal an application to review the decision of the Respondent be extended to the 24th day of October 2003.

In giving reasons for the decision under review, the delegate of the Respondent who made the decision referred to the question of whether the Applicant would suffer "undue hardship" if the sum in question was not remitted. No reference was made to the requirement contained in s 283 (1) that the request for remission must be made before the realisation charge has been paid.

At the outset of these proceedings, the Tribunal raised with the parties as a preliminary point the question of whether the Tribunal had jurisdiction to consider this matter as there was material before the Tribunal to suggest that the realisations charge had in fact been paid to the Respondent prior to the Insolvency and Trustee Service Australia making the request for remission of the charge.

The Respondent called Mr Castrisos, the Deputy Official Receiver in Bankruptcy in Sydney, to give evidence on the preliminary point. Mr Castrisos' statement of evidence is Exhibit R2 and having regard to that document, Mr Castrisos' oral evidence and the documents produced to the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, we make the following findings of fact:

i. The Applicant was made bankrupt on 7 August 2001 on her own petition and the Official Trustee in Bankruptcy became Trustee of the bankrupt estate.

ii. On 12 August 2002, the Trustee received a sum in excess of $330.000.00 following a realisation of the Applicant's asset being her interest in a house property originally owned by her and her husband as joint tenants.

iii. Pursuant to s 6 of the Bankruptcy (Estate Charges) Act 1997 a realisation charge was imposed on the sum recovered.

iv. On 12 August 2002 the sum of $26,699.71 representing the realisations charge imposed on the Applicant's estate was transferred to a Suspense Account maintained by the trustee.

v. The sum of $26,699.71 earmarked as the realisation sum in the Applicant's estate was on 15 October 2002 together with other monies, paid from the Suspense Account to the Receiver of Public Monies.

vi. On 30 January 2003 application was made by the Applicant under s 283 of the Bankruptcy Act for remission of the realisation charge.

vii. By correspondence dated 7 February 2003 the Official Receiver as the person liable to pay the charge made application to the Respondent for remission of the said charge (see document T8).

As was pointed out by Deputy President Forrest in Re Exell and Inspector-General of Bankruptcy [2000] AATA 13; (2000) 30 AAR 320 at paragraph 22 the ordinary meaning of s 283 is clear and unambiguous.

We have found as a matter of fact that when the Applicant made her application for the remission of the realisations charge, that charge had already been paid, so that irrespective of whether or not the Applicant could show undue hardship resulting from the failure to remit the said charge, her request was out of time and could not be considered either by the Respondent or this Tribunal on its merits.

We are aware that the Respondent's delegate did in fact consider the application upon its merits but that initial failure to advert to the jurisdictional point by the Respondent cannot bind this Tribunal in exercising its jurisdiction. The Tribunal must act according to the statute and the parties cannot confer jurisdiction upon the Administrative Appeals Tribunal where none exists, or waive compliance with the specific requirements of the legislation; see for example Roberts v Repatriation Commission [1992] FCA 642; (1992) 111 ALR 436 at 441, Kuswardana v Minister for Immigration and Ethnic Affairs [1981] FCA 66; (1981) 35 ALR 186 and Re Bowen and Repatriation Commission [1994] AATA 53; (1994) 32 ALD 700 especially at paragraph 27.

It was submitted by the Applicant that by automatically making the payment of the realisation charge without prior reference to her, the Insolvency and Trustee Service Australia had subverted the ameliorating provisions of s 283 Bankruptcy Act. In practice this may be the effect of requiring the application for relief to be made prior to the payment of the charge but this unfortunate result cannot alter the plain words of the statute.

Further, we do not consider that there is any obligation upon the Trustee of the bankrupt estate to hold the monies and pay them only during the period of 35 days after the end of the charge period as defined in s 4(1) of the Bankruptcy (Estate Charges) Act 1997.

Although the Applicant sought to rely upon re Excell (supra) we find that the reasons for decision in that matter do not address the question of when the realisation charge was actually paid and paragraph 8 and 11 of there reasons for decision make it clear that the Tribunal accepted that the request was made prior to payment.

We do not regard Exhibit A3 being a document entitled "IG Direction 2 1997" as assisting the Applicant. That document refers to s 117 of the Bankruptcy Act, and deals with the transfer of the proceeds of insurance policies.

In any event, no direction by the Inspector-General in Bankruptcy can override the operation of the Bankruptcy Act and as stated above, to our mind the operation of s 283 of the Act is clear and unambiguous.

By submissions received subsequent to the hearing, the Applicant sought to argue that the early payment of the charge was contrary to the Bankruptcy Act. We do not accept this submission and regard the actions of the Trustee in making an early payment of the charge as entirely proper. Due effect of an early payment would be that a bankrupt could apply for an early discharge from bankruptcy.

The only other matter raised by the Applicant was s 306 Bankruptcy Act which states inter alia, that formal defects are not to invalidate proceedings. That section however refers to proceedings before a court and not to matters such as refunds pursuant to s 283.

17.

As the request on behalf of the Applicant was not made prior to the payment of the realisation charge the decision under review must be affirmed.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen, Senior Member J Constance

Signed: (E.Pope) .....................................................................................

Associate

Date of Hearing 17 August 2004

Date of Decision 27 August 2004

Applicant self-represented

Solicitor for the Respondent Mr M Murray, Australian Government Solicitor