Federal Court of Australia

Official Receiver v Chan [2024] FCA 542

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 57(3B) of the Bankruptcy Act 1966 (Cth), the applicant is directed to accept the debtor's petition by joint debtors that was presented by Sook Leng Chan and Austin Chan on 3 April 2024.

2.    Pursuant to s 57(3C) of the Bankruptcy Act 1966, the time of commencement of the bankruptcy of each of the joint debtors shall be 3 April 2024.

3.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    After the decision of the High Court in R v Davison (1954) 90 CLR 353, the Clyne Committee recommended that legislative provision be made for a debtor to present a petition for bankruptcy as to the debtor's own estate. The legislation was amended accordingly. Then it was decided that the statutory provision which allowed a debtor to petition for their own bankruptcy did not permit the presentation of a joint petition by more than one debtor if the debtors were not in partnership: Re Pepper (1969) 14 FLR 282. The statute was again amended to allow a joint petition in respect of any joint estate. Since then, the circumstances in which such a petition may be presented have been regulated in different ways.

2    The current provision in relation to the presentation of a petition by joint debtors who are not in a partnership is to be found in s 57 of the Bankruptcy Act 1966 (Cth). It provides for presentation of the petition to the Official Receiver. It also specifies circumstances in which the Official Receiver must refer such a petition to the Court for a direction to accept or reject the petition: s 57(3B). The Official Receiver must do so if there is at least one creditor's petition pending against one of the debtors who have presented the petition and the creditor's petition does not relate to all those debtors.

3    Sook Leng Chan and Austin Chan have each completed bankruptcy forms that incorporate questions for a debtor's petition in which they have indicated that they seek to be made bankrupt jointly with another person (each to the other). At the time that the forms were submitted to the Official Receiver there was a pending creditor's petition that had been filed by the Deputy Commissioner of Taxation against Sook Leng Chan. However, there was no pending creditor's petition filed against Austin Chan.

4    As required by s 57(3B), the Official Receiver has referred to the Court the debtor's petition by joint debtors that has been presented. As separate forms have been completed by each debtor, there are two referrals. The referral applications have been served upon the Deputy Commissioner of Taxation. The Commissioner does not oppose the Court directing the Official Receiver to accept the debtor's petition. The Official Receiver makes no submission opposing the making of a direction.

5    The referral applications have been served also upon each of the debtors. Prior to the hearing, the Court received an informal communication to the effect that the debtors did not seek to make any submissions. At the hearing of the referral applications, the matters were called three times in the precinct of the Court but there was no appearance for the debtors.

6    Quite properly, the Official Receiver has advanced short submissions informing the Court of the circumstances as known to the Official Receiver. There is no indication of any factual circumstance which may give rise to a concern that the petitions by the debtors have been presented for the purpose of affecting the date of the relevant act of bankruptcy: as to which, see Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589.

7    In those circumstances, I am satisfied that the Court should direct the Official Receiver to accept the petitions.

8    If the Court directs the acceptance of the petitions then it must specify the time of commencement of each bankruptcy: s 57(3C).

9    The bankruptcy notice founding the creditor's petition by the Commissioner was served on Sook Leng Chan on 18 November 2023. The date of the act of bankruptcy arising from the failure to comply with the notice is 21 days thereafter, being 9 December 2023, but extended to 11 December 2023 by operation of s 36(2) of the Acts Interpretation Act 1901 (Cth).

10    In those circumstances, the Official Receiver submitted that it was appropriate to specify 11 December 2023 as the date of the act of bankruptcy for the petition as presented by Sook Leng Chan. In the case of Austin Chan, it was submitted that the date that the forms of application were presented to the Official Receiver, being 3 April 2023, was the appropriate date.

11    In the ordinary case where a debtor's petition is presented, the person shall be deemed to become a bankrupt 'at the first instant of the day on which the petition is accepted by the Official Receiver': s 57A. The provision that specifies when a bankruptcy commences on a debtor's petition was introduced to align the time of commencement by the administrative process of acceptance by an official with what occurred when a judicial order was made on a creditor's petition: see Explanatory Memorandum for Bankruptcy Amendment Bill 1979 (Cth) as circulated by the Minister for Business & Consumer Affairs, at pages 39-41. As there explained, it was a legislative change that had significance for the application of provisions in relation to 'after-acquired property' of a bankrupt.

12    A joint petition by debtors enables the bankruptcy of their estates to be administered together on the basis that there are assets or liabilities (or both) that are joint. If there were separate administrations that were successive then the legal event of the commencement of the first bankruptcy would then provide part of the context in which the successive administration was to be conducted. This may have consequences for the administration of the estates. If bankruptcies in respect of debtors with joint assets or liabilities (or both) commence on different dates then the after-acquired property provisions will operate at different times and may do so in respect of joint assets.

13    In short, it seems to me that there is good reason for debtor's petitions by joint debtors to have the same commencement date as to the administration in respect of each of the joint debtors. If there is thought to be good reason to be found in the circumstances relating to a creditor's petition as to why one administration should commence before the other then that may be a reason why the Court would direct that a debtor's petition by joint debtors not be accepted. However, if the petition is to be accepted then the commencement date for the bankruptcy for each of the joint debtors should be the same.

14    Usually, a bankruptcy commences on the date when the relevant administrative act occurs or the judicial order is pronounced. That is to say, it speaks prospectively. There may be significance as to when the relevant act of bankruptcy that founds a creditor's petition actually occurred. Therefore, it is usual for that date to be noted when making a sequestration order on a creditor's petition. However, when it comes to a debtor's petition by joint debtors, in the usual case, the petitioning debtors become bankrupt upon the Official Receiver endorsing the petition as having been accepted: s 57(5).

15    In the absence of any evident reason why there should be a deferment of the date of bankruptcy by reason of the need to seek a direction as to whether to accept a debtor's petition (or some reason why there should be an earlier date), it seems to me that it will usually be appropriate to specify a date at or about when the endorsement would have occurred if it had not been necessary to seek the direction. In the circumstances, I propose to specify the date that the debtor's petition was presented to the Official Receiver as the commencement date for the bankruptcy of each debtor, being 3 April 2024.

16    The Official Receiver submitted that there should be no order as to costs. I accept that such an order is appropriate.

17    I will make orders in those terms in each of the referral applications.

Associate:

Dated:    23 May 2024