Robinson (Trustee), in the matter of Stevanovic; National Australia Bank Limited v Stevanovic

REASONS FOR JUDGMENT 1 These proceedings were commenced in this Court on 9 June 2005 by National Australia Bank Limited ("NAB") which sought a sequestration order against the estate of the respondent ("Mr Stevanovic") who has since died. 2 NAB claimed a debt owed to it of $8,533.40 resulting from judgments in its favour against Mr Stevanovic in the Local Court of New South Wales on 9 November 2004. It was alleged that Mr Stevanovic had failed to comply with a bankruptcy notice served on him on 11 January 2005. 3 On 13 July 2005 a Registrar of the Court made a sequestration order against the estate of Mr Stevanovic. On that date also, Mark Julian Robinson, Chartered Accountant, was appointed the trustee of Mr Stevanovic's bankrupt estate. 4 The matter with which this judgment deals is a notice of motion filed by the trustee on 24 February 2011 seeking a distribution of dividends amongst creditors of the bankrupt estate who have proved their debts. On 8 April 2011 I made orders in accordance with those sought by the trustee. This judgment sets out the reasons why I did so. 5 In support of the notice of motion, Mr Robinson swore an affidavit which deposed to the matters set out hereunder. Mr Stevanovic failed to file a statement of affairs in accordance with s 54 of the Bankruptcy Act 1966 (Cth) ("the Act"). Efforts by the trustee to contact Mr Stevanovic by registered post were unfruitful as his letters were returned, sometimes with some form of comment. Telephone and face-to-face conversations between Mr Stevanovic and members of the staff of PPB (the firm of which Mr Robinson is a partner) in mid to late 2005 were equally unproductive. Over the next few years the trustee responded to correspondence from various solicitors who wrote on Mr Stevanovic's behalf. It was necessary for the trustee to confirm to them that Mr Stevanovic had been declared bankrupt, that he (the trustee) was in the course of administering the estate, that Mr Stevanovic had not lodged a statement of affairs, but should do so, and that the failure to lodge a statement of affairs was unduly complicating the administration of the estate and adding to the costs of administering the estate. It appears from this correspondence that during the course of his administration of the estate the trustee sold property owned by Mr Stevanovic. 6 The trustee's inquiries in the administration of the estate included inquiries of the Australian Taxation Office, inquiries of five financial institutions (including NAB) and land title and other searches. The trustee also searched for any credit inquiries with a credit reporting agency. He caused advertisements to be placed in two daily papers, The Sydney Morning Herald and The Australian, in November 2009 stating his intention to declare a final dividend to creditors. 7 At the date of swearing Mr Robinson's affidavit in support of the notice of motion, the amount of $87,315.95 had been identified as available for distribution to the creditors of Mr Stevanovic's estate. The trustee had accepted a proof of debt from NAB in the amount of $8,533. NAB was the only creditor to have lodged a proof of debt. The trustee was not aware of any other creditors. 8 From documents tendered at the hearing of the notice of motion, the following may also be concluded. Mr Stevanovic died between 9 and 11 August 2010 from undetermined natural causes. There was no inquest. Mr Stevanovic died intestate. On 1 November 2010 his son, Mr Christopher Stevanovic, applied for letters of administration of his father's estate. Letters of administration were granted by the Supreme Court of New South Wales on 6 January 2011. On 12 January 2011 the letters of administration and supporting documents were forwarded to the trustee. On that date, Mr Christopher Stevanovic also provided a statement of affairs, signed on 11 January 2011, as administrator of the deceased estate. The statement disclosed a further sum of money of which Mr Christopher Stevanovic was aware, but the trustee was not - a sum of $12,068.75 held in an account in the Newcastle Permanent Building Society. 9 On 21 January 2011 the trustee wrote to Insolvency and Trustee Services Australia ("ITSA") asking if the statement of affairs could be accepted "to enable a 100 cents in the dollar dividend to the only known creditor and the Bankruptcy to be annulled". He pointed out that if the statement of affairs was not accepted he would be obliged to make an application to the Court of the present kind. ITSA replied saying: There is no provision in the Act that allows for another party to complete and file a Statement of Affairs on behalf of a Bankrupt in circumstances where a Bankrupt becomes deceased prior to the filing of their Statement of Affairs. Accordingly, the Statement of Affairs completed by the Administrator of the Estate of the late Zivota Stevanovic, dated 11 January 2011 and filed with the Official Receiver in Bankruptcy on 17 January 2011, cannot be accepted. Should you wish to proceed with a distribution of dividends in the above estate, you will need to make an application to the Court for an order pursuant to section 146 of the Act. 10 I very much doubt whether the administrator of a deceased estate, appointed under letters of administration issued by the Supreme Court of New South Wales, is properly described as "another party". I cannot, for my own part, see why an administrator of a deceased estate would be incapable of filing a statement of affairs in circumstances where Part XI of the Act does not apply - i.e. where the debtor has been made bankrupt before the time of death. Nor have the researches of counsel for the trustee revealed any support for the position taken by ITSA. 11 Section 63 of the Act provides as follows: Where a bankrupt dies before he or she is discharged from the bankruptcy, the proceedings in bankruptcy shall, unless the Court otherwise directs, be continued, so far as they are capable of being continued, as if he or she were alive. 12 "Proceedings in connexion with bankruptcy" are the subject of Part IV of the Act (ss 40 - 76B) in which s 63 appears. The requirement to file a statement of affairs is also in Part IV of the Act (s 54). Under s 149 of the Act, time begins to run, for the purpose of automatic discharge from bankruptcy, from the time a statement of affairs is filed. In Sofia v Pattison [1997] FCA 1586, Finkelstein J accepted that filing a statement of affairs was within the notion of a "proceeding" in bankruptcy. It seems to me, with respect, that this is correct. In Re Buckle (1969) 15 FLR 460, Gibbs J also expressed the view (at 463) that "[s 63] is not limited to particular proceedings that may be pending at the date of death, but extends to the bankruptcy proceedings generally". As a result, I see no reason why an administrator of a deceased estate could not act to discharge the responsibilities of a bankrupt person, whether with respect to filing a statement of affairs or discharging the other obligations towards a trustee which might arise in the administration of a bankrupt estate. 13 However, it is not necessary to dwell on the point. In the circumstances facing the trustee, the orders sought by him were appropriate. I therefore made orders in the terms of orders 1 and 3 proposed in the notice of motion. Order 1 was stayed until appropriate steps are taken in relation to the proceeds of the account in the Newcastle Permanent Building Society. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.