Tsingaris v Official Receiver for the Bankruptcy District of the State of Victoria

REASONS FOR JUDGMENT 1 There is before the Court an application by John Tsingaris, a bankrupt, who seeks a declaration that a statement of affairs signed by him on 27 November 1996 be deemed to have been filed on 16 December 1996 in the office of the Official Receiver. Whether or not that statement of affairs was so filed is crucial to the bankrupt because, by reason of the operation of s 149 of the Bankruptcy Act 1966 (Cth) ("the Act"), discharge from bankruptcy occurs at the end of the period of three years from the date on which the bankrupt filed his or her statement of affairs. 2 The date of 16 December 1996 is important because, prior to that date, s 54(1) of the Act provided: "Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he is notified of the bankruptcy: (a) make out and file in the office of the Registrar for the District in which the sequestration order was made a statement of his affairs; and (b) furnish a copy of the statement to the trustee." 3 This same subsection in its present form provides: "Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he or she is notified of the bankruptcy: (a) make out and file in the office of the Official Receiver for the District in which the sequestration order was made a statement of his or her affairs; and (b) furnish a copy of the statement to the trustee." 4 The effect of the amendments to the Act of 16 December 1996 was to substitute for the Registrar in Bankruptcy (an officer of the Federal Court) the Official Receiver as the person with whom the bankrupt's original statement of affairs should be filed. 5 The facts which underlie the present application are not in dispute. The applicant was made bankrupt on 11 July 1996. On 16 July 1996, Deanne Nation, an employee within the office of the Official Receiver, wrote to the applicant informing him of his obligations under s 54(1) of the Act, as it then stood. She told him that he was required to file an original statement of affairs within 14 days of notification of his bankruptcy with the office of the Registrar in Bankruptcy, at the District Registry of the Federal Court. 6 Ms Nation wrote to the applicant again on 26 July 1996 reminding him of his obligation to file an original statement of affairs. On 5 August 1996 he sent what purported to be a statement of his affairs to Ms Nation. That document was, however, defective in several respects and did not satisfy the requirements of the Act. Subsequently, after several further communications from Ms Nation, the applicant attended upon her on 27 November 1996. On that date he completed and furnished to her a copy of a statement of affairs in proper form. 7 Ms Nation has given evidence before me that she reminded the applicant again on 27 November 1996 of his obligation to file with the Registrar in Bankruptcy the original of that statement of affairs. She stamped that original with an endorsement indicating that the applicant was "requested" to file it at the Federal Court. 8 The applicant has given evidence before me that he did not understand from anything which he was told by Ms Nation that it was his obligation personally to file his original statement of affairs at the Federal Court. He believed, erroneously as it transpired, that Ms Nation would ensure that all of the requirements set out in the Act were met. He retained possession of the original statement of affairs, and has continued to retain possession of that document until the present day. 9 It is important to note that when Ms Nation received the copy of the statement of affairs on 27 November 1996 she was, in effect, wearing two hats. She was employed within, and acting as agent for, the office of the Official Trustee in Bankruptcy, a corporation sole created by s 18(1) of the Act. She was also, however, an employee within the office of the Official Receiver, constituted by s 15 of the Act. These two offices were, and are, for all practical purposes, one and the same, though designated under the Act to perform different statutory functions. 10 Had the amendments which took effect on 16 December 1996 come into operation a few weeks earlier, the furnishing by the applicant of the copy statement of affairs to Ms Nation, representing as she did both the Official Trustee in Bankruptcy and the Official Receiver, would plainly have amounted to substantial compliance with the obligations imposed upon a bankrupt under s 54(1) of the Act. 11 There was no longer any requirement after 16 December 1996 to involve the Federal Court, or its Registrar in Bankruptcy (whose office, in any event, was abolished by the Bankruptcy Legislation Amendment Act 1996 (Cth)), in the process of receiving from a bankrupt an original statement of affairs. 12 It is clear that there has been on file within the office of the Official Receiver since 27 November 1996 a copy of the applicant's statement of affairs. The original of that document has not, however, been provided to the Official Receiver as required by s 54(1)(a) of the Act, in its present form. 13 There is no doubt in my mind that a failure by a bankrupt to provide to the Official Receiver an original statement of affairs in circumstances where a copy has been provided is an irregularity of a kind which may be excused pursuant to s 306(1) of the Act. That section provides as follows: "Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court." 14 In Sofia v Pattison (unreported, Federal Court, 20 October 1997) Finkelstein J held that s 306(1) could be invoked to cure an irregularity arising from the failure to provide to the Registrar in Bankruptcy an original statement of affairs in circumstances where a copy was provided. I respectfully agree with his Honour's conclusion in that regard. 15 Finkelstein J also determined that the term "proceedings" in s 306 should be given a wide definition. His Honour held that the term extends beyond proceedings in court to non-curial proceedings, and is apt to include a defective filing of a statement of affairs - see Sofia (supra) at pp 4-5. 16 In my opinion, s 306(1) may be invoked by the applicant to excuse the irregularity which arose in the present case by reason of his having failed within the requisite period, in 1996, to file his statement of affairs with the office of the Registrar in Bankruptcy. The applicant's obligation to file that document with the Registrar subsisted for a very short time after 27 November 1996. As from 16 December 1996 the Official Receiver replaced the Registrar as the person with whom the statement of affairs should be filed. The evidence shows that the Official Receiver was in possession of a copy of that statement of affairs from 27 November 1996, and has been in possession of that document continuously since that date. 17 There are several authorities to which my attention has been drawn which have limited the scope for ameliorating the consequences which may be visited upon a bankrupt who, for whatever reason, has failed to comply with the requirements of s 54(1) of the Act. 18 I refer first to the decision of a Full Court of this Court in Nilant v Macchia (1997) 78 FCR 419 where it was held, overruling an earlier decision of Burchett J to the contrary in Re Rohde (1993) 42 FCR 149, that the period of bankruptcy under s 149 of the Act could not be abridged pursuant to s 33(1)(c) of the Act. It should be noted, however, that unlike the present case, the bankrupt in that case had failed for several years after orders were made for the sequestration of his estate to file any statement of affairs. Moreover, the Full Court did not, in its reasons for judgment, refer to s 306(1). It would appear that the powers of the Court pursuant to that section were not relied upon in that case. 19 In Rosenfeldt v The Official Trustee in Bankruptcy (1997) 79 FCR 340 the applicant had furnished a copy of his statement of affairs to the Official Trustee in Bankruptcy but had not filed the original with the Registrar. Foster J rejected any possible application of s 33(1)(c) of the Act, believing himself to be bound by the decision of the Full Court in Nilant to do so. His Honour also held that s 30(1)(b) of the Act did not permit the Court to make such orders as it would otherwise have thought proper in order to do justice in the case. He expressed considerable regret at having to arrive at that conclusion, which he regarded as occasioning injustice to the applicant. His Honour was not asked to consider the possible application of s 306(1) of the Act as an avenue by which that consequence could be avoided. 20 Finally, in Van-Minnen; ex parte Harrison [1999] FCA 43 the applicant sought an order that the filing of her statement of affairs with her trustee in bankruptcy be recognised as filing with the Registrar in Bankruptcy for the purposes of s 54(1) of the Act. She relied upon ss 30(1)(b) and 33(1)(c) of the Act in support of her application. RD Nicholson J held that the decision of the Full Court in Nilant precluded him from granting the relief sought. 21 In my opinion, the facts in the present application differ significantly from the facts in Rosenfeldt and in Van-Minnen. In neither of those cases had the applicant filed a statement of affairs with a person or entity who was, for all practical purposes, both the trustee, and the appropriate repository of the statement at that time, the Registrar in Bankruptcy. In Rosenfeldt a period of over three years had elapsed between the time that the Official Trustee was provided with the statement of affairs, and the time that the Registrar (who was, of course, a completely separate entity) received that document. In Van-Minnen, the statement of affairs had been filed with a registered trustee in bankruptcy, and not with the Official Trustee. It was not until a considerable time thereafter that the Registrar came into possession of that document. 22 By way of contrast, Ms Nation, while acting as agent for both the Official Trustee and the Official Receiver, was provided with a copy of the statement of affairs on 27 November 1996. Within a few weeks of that date, the requirement that the Registrar in Bankruptcy be furnished with the original of that document had been legislatively abrogated, and the Official Receiver substituted for the Registrar. In these circumstances, it would be manifestly unjust, in my view, to visit upon the applicant the status of bankruptcy for a further three years merely to ensure the observance of what, in this case, would be an empty formality. 23 Although I can understand why the Court in Rosenfeldt and in Van-Minnen felt constrained to find against the applicants in those cases, I am satisfied that the present case calls for a different outcome. I propose to grant the declaration sought. 24 I cannot pass from my consideration of this matter without adding my voice to the chorus of lament which has been raised for some years now regarding the need for Parliament to address the very real injustice which may be occasioned by the provisions of the Act in their present form. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.