Seeger, in the matter of Seeger v Seeger

REASONS FOR JUDGMENT 1 This is an application pursuant to s 153B of the Bankruptcy Act 1966 (Cth) to annul a bankruptcy. The bankrupt, Michael Johann Seeger, became bankrupt on his own petition on 3 August 1999. The petition was accompanied by a statement of affairs in the form of ex 3. 2 The circumstances in which this occurred appear to have been closely related to proceedings in the Family Court between himself and the present applicant who was previously his wife. That lady has the benefit of an order made by Bell J on 14 May 1999 pursuant to which the present bankrupt is obliged to pay to her the sum of $212,500 within three months of that date and to transfer to her property described as Lot 2 on Registered Plan 807194. These orders do not finally resolve the property claims as between the parties to the marriage, the matter having been left in abeyance, apparently because his Honour was dissatisfied as to the completeness of the evidence which was before him. At least I infer that to have been the reason. 3 The bankrupt has not complied with either of these orders. With respect to the land, he has executed a transfer, but the certificate of title has not been delivered to the present applicant. The bankrupt says that he is willing to do so. That matter is not relevant in any sense to the present proceedings because it seems to me that the land has, in equity at least, vested in the present applicant. The transfer is only a formality, and the bankrupt does not dispute his obligation to affect it. It appears that the bankrupt's son, presumably by an earlier marriage, has a claim with respect to the land, but that is not a matter with which I am presently concerned. The Trustee in Bankruptcy makes no claim to that property. 4 The application to annul the bankruptcy is upon the basis that the statement of affairs lodged in support of the debtor's petition was inaccurate, and that the inaccuracies were such that to permit the bankruptcy to stand would constitute an abuse of the Court's process. The statement of affairs demonstrated that the bankrupt had assets of $79.80 in cash in a bank account, a superannuation policy worth $5000, a motor vehicle worth $400; a total of $5479.80. It disclosed liabilities, including the amount of the order made in the Family Court for cash payment, as totalling $252,859, plus a further $15,000 in costs owed to his solicitors. 5 Whilst it is more or less accepted that the liabilities were as the bankrupt set them out, the applicant submits that he failed to disclose two significant assets. The first is certain property, presently in the name of the Noosa Shire Council, which the Council has agreed to transfer to the bankrupt. This appears from ex "CAG23" to the affidavit of Craig Anthony Griffin filed on 21 December 1999. Clause 1 of ex "CAG23" demonstrates that a plot of land there described as Lot 1 on Registered Plan 807194 and part of Lot 2 on Registered Plan 94976 are to be transferred to the bankrupt. He suggested that for some reason, this was now not likely to occur, but there is no evidence to that effect. The land in question has been valued at $45,000 (see ex "CAG24") and on the evidence, I am satisfied that there was a failure to disclose this asset. It may be that the bankrupt had good reason for failing to do so in the sense that he misunderstood his obligations in connection therewith, but that is not relevant for present purposes. 6 The other asset is an amount of $425,000 which he received as the result of sale of property and subsequently sent to the Philippines for investment (as he says in an affidavit filed by him in the Family Court a copy of which is ex 2). Although he makes half-hearted attempts in that affidavit to assert that the money is not easily recoverable by him, and although he said in submissions that he feared that it may be lost, there is no admissible evidence to indicate that such is the case. I am certainly not persuaded by his statements in the affidavit which is ex 2. 7 It is quite clear that he sent $425,000 to the Philippines for the purposes of investment and there seems to be no legal reason demonstrated which would prevent him from recovering that amount. Thus it is clear that as at the date of presentation of his petition he had substantials assets, more than sufficient to pay his debts. The present proceedings are curious in that one would normally have expected the applicant to be anxious to advance the bankruptcy in order to facilitate the enforcement of her judgment. For some reason she or her legal advisers appear to believe that it will be easier to enforce the Family Court order in the event that the bankruptcy is annulled. I suppose that is a judgment which she is entitled to make. 8 It is relatively clear to me that the bankrupt ought not to have had the benefit of bankruptcy upon the basis of the statement of affairs filed by him at the time at which he presented his petition. The decision of Mansfield J in Re Almassy [1999] FCA 1004 (unreported, 26 July 1999) supports the proposition that bankruptcy as a result of a debtor's petition may be annulled if it can be shown that at the relevant time, the bankrupt was solvent. There is no reason for present purposes to doubt that such was the case as at 13 August last year. In those circumstances I am of the view that the bankruptcy ought be annulled. 9 A question remains as to the costs incurred by the trustee in acting in the estate. The amount is small, something less than $400. It seems that the only substantial asset in hand is the insurance policy. I know nothing about the realisation of the motor vehicle. It would be inappropriate to annul the bankruptcy unless the trustee's costs are secured. I therefore propose to make the annulment conditional upon the applicant securing to the trustee the payment of it's costs of acting in the bankruptcy up to a maximum of $400. To the extent that the applicant is obliged to make any payment in respect of providing such security or in meeting the trustee's costs, she should recover those sums from the bankrupt. 10 I should say that the applicant has not sought to establish that the bankrupt was attempting to avoid his obligations to her pursuant to the orders made in the Family Court. Nonetheless I am willing to infer that the bankrupt's conduct in presenting the petition was designed for some purpose ulterior to the purposes of the Bankruptcy Act. I suspect that it had something to do with the conduct of the Family Court proceedings, but it is not necessary to take that matter further. 11 In the circumstances, I order that the bankruptcy be annulled. I further order the bankrupt to pay the trustee's costs of acting in the bankruptcy. I also order that the applicant secure to the trustee the payment of those costs up to a limit of $400. I further order that to the extent that the applicant is obliged to pay any sum pursuant to that order, she recover that sum from the bankrupt. I order that the bankrupt pay the applicant's costs of these proceedings.