Talent, in the matter of Talent v Official Receiver in Bankruptcy

Federal Court of Australia|2020-09-09|Before: Flick J

The Applicant is to bring in Short Minutes of Orders to give effect to these reasons within seven (7) days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

FLICK J: 1 In the present proceeding an order is sought pursuant to s 33A of the Bankruptcy Act 1966 (Cth) (the "Bankruptcy Act") that a Statement of Affairs "be treated as having been filed" two years and nine months before the date of the order sought. That relief is sought in an Amended Originating Application filed on 29 May 2020. An earlier application seeking declaratory relief has been abandoned. 2 The Applicant in the proceeding, Mr John Talent, was made bankrupt in May 2000. The petitioning creditor was the Australian Taxation Office. On 28 June 2001, he came before this Court for the purposes of an oral examination as to his financial affairs. It was prior to the hearing that day that Mr Talent sought to give to an officer of the Australian Financial Security Authority (Mr Peter Olsen) a Statement of Affairs he had completed. Mr Olsen declined to accept that Statement. 3 Notwithstanding the fact of him having been made bankrupt in May 2000, it was not until 2 June 2020 that Mr Talent filed a Statement of Affairs as now recorded on the National Personal Insolvency Index. In the interim, the properties previously owned by Mr Talent at Braddon in the Australian Capital Territory and at Tumut in the State of New South Wales had been sold and a pro rata distribution made to creditors. Those creditors, including the Deputy Commissioner of Taxation, have been informed of the present proceeding. No creditor has sought to resist the making of the order now sought. 4 It is concluded that an order should be made in the terms sought by Mr Talent.

Section 33A of the Bankruptcy Act 5 Section 33A provides as follows: Alteration of filing date for statement of affairs (1) This section applies to a statement of affairs that was filed for the purposes of section 54, 55, 56B, 56F or 57 by a bankrupt, or by a person who later became a bankrupt. (2) If the Court is satisfied that the person believed, on reasonable grounds, that the statement had already been filed at a time before it was actually filed, the Court may order that the statement is to be treated as having been filed at a time before it was actually filed. (3) The Court cannot make an order that would result in the person being discharged from bankruptcy earlier than 30 days after the order is made. (4) In this section: filed includes presented, lodged or given. This provision was introduced by way of amendment in 2002. 6 It will be noted in respect to this provision that: the section confers a discretion upon the Court, namely that "the Court may order…"; the discretion conferred is subject to a condition precedent, namely that the Court must be "satisfied that the person believed, on reasonable grounds, that the statement had already been filed"; and the term "filed" is expressly defined for the purposes of the section in a non-exhaustive manner in terms "includ[ing] presented, lodged or given". The extended definition of the term "filed" stands in contrast to the more formal requirements otherwise imposed by the definition of the term "file" in reg 16.02 of the Bankruptcy Regulations 1966 (Cth). The definition should not be construed in any narrow or pedantic manner but in a manner which gives full effect to the remedial purpose sought to be achieved by s 33A. 7 Although the discretion is conferred in otherwise unconfined terms, it nevertheless remains a discretion to be exercised in a manner which promotes the objects and purposes of the Bankruptcy Act as a whole. Informed in that manner, the Court's discretion is to be exercised in a manner which recognises or takes into account: the importance of the statutory requirement imposed by s 54(1) of the Bankruptcy Act to file a statement of affairs "within 14 days from the day on which he or she is notified of the bankruptcy"; the public interest in there being available for inspection a document which discloses the property of a bankrupt, it being said that "it is in the interests of the public in the encouragement of morality in trading that the financial situation of a bankrupt be open to inspection" (Nilant v Macchia [2000] FCA 1528 at [29], (2000) 104 FCR 238 at 245 per Hill J); the fact that non-compliance with s 54 "is not a formal defect, or a mere irregularity" but a requirement which attracts a statutory penalty (Cable v Pattison [2003] FCA 1499 at [17] per Hely J. See also: Nilant v Macchia [2000] FCA at [29], (2000) 104 FCR at 245 per Hill J). Section 54 does not "operate solely for the benefit of a petitioning creditor" (de Robillard v Carver [2007] FCAFC 73 at [129], (2007) 159 FCR 38 at 61 per Buchanan J (Moore and Conti JJ agreeing). See also: Scott v de Varda [2015] FCA 239 at [13] per Flick J); the importance of making available to creditors of a bankrupt the property disclosed in the statement of affairs; the statutory context in which a bankrupt is normally discharged from bankruptcy pursuant to s 149 of the Bankruptcy Act three years from the date upon which the statement of affairs was filed; the fact that the "bringing forward" of the date upon which a statement of affairs is "treated as having been filed" necessarily brings forward the date upon which a bankrupt would otherwise be discharged; the utility in continuing a bankruptcy and outstanding matters that remain to be administered; and the attitude of the office of the Official Receiver, that being an office which can be expected to provide a fairly objective view as to what is perceived to be in the public interest, the interests of creditors and the bankrupt. The statutory context, however, also includes: the conferral upon this Court of a discretionary power and a power available to be exercised in an appropriate case. 8 Without being exhaustive, further considerations may also include on the facts of a particular case: the adequacy or completeness of the statement of affairs as is sought to be relied upon for the purposes of s 33A as compared to the statement of affairs as subsequently filed (cf. Wangman v Official Receiver, Insolvency & Trustee Service Australia [2006] FCA 202 at [45] to [57] ("Wangman")); and the extent of any delay between when a bankrupt could have first sought relief under s 33A of the Act and the date upon which such relief was in fact sought. 9 When considering whether the Court could be "satisfied" that a bankrupt "believed, on reasonable grounds, that the statement had already been filed", Collier J in Wangman concluded: [43] In my view, it was not open. On the facts of this case as outlined earlier in this judgment, it is clear that several years had passed between the attempted filing of the 1998 Statement of Affairs, and the actual filing of a statement of affairs by the appellant in 2005. During this time the appellant had no basis on which to reasonably believe, and indeed knew, that the document he had submitted for filing in 1998 had not been accepted by the Official Receiver of ITSA. In my respectful view, the section does not contemplate a bankrupt being aware for several years that his or her statement of affairs has not been accepted for filing because it was defective, and then claiming that he or she had, temporarily, a reasonable belief several years before making application to the Court, that the statement of affairs had been filed. In my view, knowledge of this kind does not accord with 'reasonable belief' within the meaning of s 33A(2). A conclusion of a Federal Magistrate that there were no reasonable grounds for the belief was there upheld by her Honour on appeal. Where a person does not believe at any point of time that a statement of affairs has been filed and indeed has no knowledge as to having been adjudged bankrupt, s 33A has no application: Matteucci v Gollant [2013] FCA 6 at [55] per Lander J. 10 When exercising the discretion in favour of making an order pursuant to s 33A, Colvin J in Cole v Australian Financial Security Authority [2019] FCA 1676 observed: [6] Mr Cole applies for an order under s 33A. I am satisfied that the matters deposed to by him establish a belief on reasonable grounds that his statement of affairs was filed sometime in late September 2016 by returning a re-dated document by post to AFSA, and that an order should be made under the statutory provision. [7] There is no suggestion that the failure to lodge a compliant statement of affairs dated after the sequestration order has had any consequence for the administration of his bankruptcy. There is no suggestion that the policy of requiring a statement of affairs on the public record has frustrated any inquiry by a third party or has compromised the provision of information to the trustees. There is no suggestion that the statement of affairs provided by Mr Cole to the trustees was otherwise deficient.

Reasonable grounds & the discretion 11 The factual basis upon which this Court was invited to make the orders sought was constituted by: a Statement of Agreed Facts; and an affidavit affirmed by Mr Talent on 22 May 2020. 12 In his affidavit Mr Talent relevantly stated that he was diagnosed with Hairy Cell Leukaemia in 1999, a condition which "significantly impacted" upon his ability "to attend to" his "legal affairs". The affidavit continued as follows: 6. On the day of the oral examination hearing, I attended the Federal Court of Australia. I brought my completed Statement of Affairs with me. Prior to the hearing I offered Statement of Affairs to Mr Peter Olsen from Australian Financial Security Authority ('AFSA'). I was informed by Mr Olsen that the sworn evidence I was about to give in the Federal Court was a higher form of evidence and it would be best that I go through the process. Mr Olsen did not accept the completed Statement of Affairs. 7. At the conclusion of the oral examination, I approached Mr Olsen outside of the court. I recall that he was with another employee from the AFSA and the lawyer who had been acting as their counsel in the hearing. I again offered Mr Olsen the completed Statement of Affairs. As best as I can recall, Mr Olsen declined to accept the document as the evidence from the oral examination would be sufficient for his purposes. 8. Around six months after the oral examination, I received a request from Mr Olsen asking for the statement of affairs. I was suspicious, confused, and angry. I had thought that as the oral examination had been completed and as I had attempted to provide the completed Statement of Affairs to Mr Olsen, that I had already complied with this requirement. I was concerned that completing a new Statement of Affairs and providing it to the AFSA would "reset" the duration of my bankruptcy. 9. I have maintained my position regarding the Statement of Affairs in my correspondence with the AFSA in the years since. 13 On this factual basis, and no matter how widely the term "filed" may be construed for the purposes of s 33A(4), no view could be formed that Mr Talent at any point of time could reasonably have believed that he had "given" a copy of his statement of affairs to Mr Olsen. On any view of the evidence, Mr Talent had attempted to give a copy of the statement to Mr Olsen but Mr Olsen had repeatedly refused to accept it. 14 But the Court can be "satisfied" that there was a basis upon which Mr Talent could reasonably believe that he had "presented" a copy of the statement of affairs to Mr Talent. There is no reason to construe the term "presented" in any manner other than its ordinary English meaning. The Shorter Oxford Dictionary provides the following definitions of the term "present": Present … put a thing before (in the presence of) someone, … 1 A thing that is offered, presented, or given; … 2 The action or an act of presenting or giving something; (a) presentation; … On the facts, the Court can be "satisfied" that at the 2 June 2001 examination, Mr Talent "presented" to Mr Olsen a Statement of Affairs by "offering" a copy to him and thereby "filed" it for the purposes of the extended definition found in s 33A. 15 The condition precedent to the exercise of the discretion conferred by s 33A has thus been satisfied. 16 With reference to the exercise of the discretion, there are a number of factors which tell against exercising the discretion conferred by s 33A in favour of Mr Talent, those factors including not only: the statutory scheme, which otherwise requires the prompt filing of a statement of affairs and an orderly and expeditious administration of a bankrupt's estate; but also: the amount of time that has expired between June 2001 and the making of the application seeking relief under s 33A in May 2020 - a period of some 19 years; the fact that Mr Talent was on notice 6 months after the oral examination that the Australian Financial Security Authority did not consider the Statement as having been filed, evidenced by its request for the Statement at that time; and the fact that at some point of time during that 19 year period, Mr Talent must have formed the view that the most appropriate course was to seek relief pursuant to s 33A - but that point of time is not disclosed, nor are the reasons given for taking whatever time expired between then and May 2020. There nevertheless remain, however, factors which tell in favour of granting the relief sought, including: the fact that no creditor, including the Deputy Commissioner of Taxation, opposes the relief sought; the absence of any utility in continuing the bankrupt status of Mr Talent; and the absence of opposition on the part of the Official Receiver. 17 On balance, it is concluded that the discretion should be granted in favour of making the orders sought. 18 Those orders included a proposed order in the following terms: That pursuant to section 33A of the Bankruptcy Act 1966, the Statement of Affairs filed with the AFSA on 21 May 2020 be treated as if it had been filed 2 years and 9 months before the date of this order. The reason for the timing of the order arises from s 33A(3). The rationale for making an order that the Statement be treated as though it had been filed two years and nine months before the order of this Court was said to be to permit the Official Receiver adequate time to take such steps as were necessary to bring the administration of the bankrupt estate of Mr Talent to an end.

CONCLUSIONS 19 The Court is "satisfied", albeit with some misgivings, that there were reasonable grounds upon which Mr Talent could believe that he had "presented" a statement of affairs to Mr Olsen on 2 June 2001, that presentation thereby constituting a "filing" for the purposes of s 33A(4) of the Bankruptcy Act. 20 It is further concluded that, on balance, the discretion conferred by s 33A(2) should be exercised in favour of Mr Talent. 21 Orders should be made in the form in which relief is sought in the Amended Originating Application. 22 Short Minutes of Orders should thus be filed, including an order specifying the date upon which the statement of affairs should be treated as having been filed.

THE ORDER OF THE COURT IS: The Applicant is to bring in Short Minutes of Orders to give effect to these reasons within seven (7) days. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Flick.

Bankruptcy Regulations 1966(Cth)reg 16.02

Bankruptcy Act 1966(Cth)ss 33A, 54, 149

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