Federal Court of Australia

Combis (Trustee) v Geason [2024] FCA 844

ORDERS

THE COURT ORDERS THAT:

1.    The hearing of the application be adjourned to 10:15 am on 14 October 2024.

2.    That application also be deemed to be an application by the applicant bankruptcy trustee for directions with respect to the administration of the estate, having regard to such affidavits as may be filed in accordance with this order.

3.    The respondent file and serve such affidavits as he may be advised on or before 22 August 2024 with respect to whether, and if so when, he filed with the Official Receiver a Statement of Affairs.

4.    Pursuant to s 30(2) of the Bankruptcy Act 1966 (Cth), the Official Receiver conduct an inquiry of the records held by the Official Receiver and of the Official Receiver’s staff in respect of whether, and if so when, according to such records and such his other inquires, the bankrupt filed with the Official Receiver a Statement of Affairs.

5.    For the purposes of that inquiry, the Registrar furnish to the Official Receiver, on request, a copy of the affidavits filed to date herein and of any filed on behalf of the respondent pursuant to this order.

6.    On or before 27 September 2024, the Official Receiver, either personally or by a duly authorised officer, make and file an affidavit attesting to the result of that inquiry, including, if a Statement of Affairs is found, a copy of that Statement of Affairs.

7.    The Registrar forthwith send a copy of this order to the Official Receiver, and forthwith thereafter make and file a report attesting to compliance by the Registrar with this order.

8.    The applicant file and serve on or before 4 October 2024 such affidavits, if any, as he may be advised in reply.

9.    The solicitors for the respondent, by the practitioner within that firm appointed to be the supervisor of one Brydie Sanderson, law graduate (supervised trainee) forthwith make and file an affidavit attesting to whether Ms Sanderson is a person whose name appears on the Register of Practitioners kept by the Registrar of the High Court of Australia under s 55B of the Judiciary Act 1903 (Cth), and, if not a person on that Register, why it was that Ms Sanderson was permitted to communicate with the Court, and what steps, if any, have been taken to ensure within that firm that only persons whose name appears on that Roll conduct business in this Court. The costs incidental to the preparation and filing of that affidavit do not form part of the respondent’s costs in the proceedings.

10.    The applicant make such public advertisement as he may be advised in respect of this order, and the hearing of an application under s 146 of the Bankruptcy Act 1966 (Cth) on 14 October 2024, and file before then such affidavits as may be advised in respect of the giving of such an advertisement.

11.    The costs incidental to the adjournment of the hearing be the applicant’s costs in the proceedings in any event.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    As long ago as 2014, Mr Dean James Geason (Mr Geason) was made bankrupt by an order of the then Federal Circuit Court of Australia. That occurred on 5 November 2014. A sequel to that was that, pursuant to s 54(1) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), Mr Geason was obliged within 14 days from the day on which he was notified of the bankruptcy to:

(a)    make out and file with the official receiver a statement of his affairs, and

(b)    furnish a copy of the statement to the trustee.

At the time, the Official Trustee was the trustee of Mr Geason's bankrupt estate. That remained the position until 21 December 2022.

2    On 21 December 2022, Mr Nick Combis (Mr Combis), a chartered accountant and registered trustee, became, in succession to the Official Trustee, the trustee of Mr Geason’s bankrupt estate. In his capacity as bankruptcy trustee, Mr Combis has applied, pursuant to s 146 of the Bankruptcy Act, for an order that the estate be administered and dividends distributed, notwithstanding a failure on the part of Mr Geason to file a statement of affairs, as required.

3    In the ordinary course of events, such an application may be dealt with without notice to the bankrupt, although often such notice is out of an abundance of caution nonetheless given. As Gleeson J, then a judge of this Court, observed in Rahman v Lombe [2018] FCA 457, at [12]:

There is no requirement under the Bankruptcy Act that the bankrupt be named as a respondent in an application under section 146.

[citations omitted]

4    This case, however, offers an example of why it is that it may be prudent, even in the absence of obligation, to give notice to a bankrupt of an application under s 146. Mr Combis has followed that prudent course. As he quite properly attested to in affidavit evidence, upon foreshadowing in April this year the making of the present application, Mr Geason raised with him that he had filed a statement of affairs.

5    These matters rested until notice of the hearing today was served on Mr Geason. That saw an appearance on his behalf by counsel seeking an adjournment of the hearing of the s 146 application on the basis, initially by assertion, that Mr Geason had filed a statement of affairs with the Official Receiver. In the course of the hearing, that assertion came to be supported by an affidavit made by Mr Geason’s solicitor on information and belief. It is common ground that notice of the hearing today came to Mr Geason's attention on 19 July. That being so, and especially given the brevity of the affidavit which came to be filed in the course of the hearing, there is no particular reason why such evidence could not have been placed on the court file and served on those acting for Mr Combis, either yesterday or on Monday.

6    On the evidence read on behalf of the trustee, and apart from the assertion in telephone conversation in April with Mr Combis, there is in correspondence with Mr Combis a statement by an officer of the Australian Financial Services Authority, that no statement of affairs has been filed.

7    Beyond that, there is evidence, again quite properly placed before the court by Mr Combis, that proceedings were instituted in a Local Court in New South Wales against Mr Geason, alleging a contravention of s 54(1) of the Bankruptcy Act. To this charge, Mr Geason, on the evidence before me, pleaded not guilty. Earlier this year, in February it seems, that proceeding was discontinued. The only evidence as to the basis of that discontinuance as known to Mr Combis — and, again, properly placed before me — is that the proceeding was discontinued “in the public interest”. Given that the offence created by s 54(1) is an offence of strict liability, a discontinuance on that basis, taken in conjunction with the conversation in April this year and the affidavit — albeit belatedly filed on behalf of Mr Geason — raises an interrogative note in my mind as to the existence of a triable issue.

8    That triable issue concerns a jurisdictional fact in relation to an application under s 146, namely, whether there was indeed a failure to file the statement of affairs. In those circumstances, it seems to me that the case is one which should proceed to a trial in respect of that issue, but that is not the only subject which should be considered at any such trial. Obviously enough, if persuaded that no statement of affairs was filed, then I would, in the ordinary course, proceed to deal with the application for distribution of the estate on its merits. But a position might be reached whereby a statement of affairs is shown to have been filed. In those circumstances, it may be necessary, depending on a view formed by Mr Combis and application made by him, to give directions to the end of a timely finalisation of the administration of the estate.

9    As was highlighted in the submissions helpfully made on behalf of Mr Combis by Mr Downes, an obligation which falls on a bankruptcy trustee by virtue of s 140(1) of the Bankruptcy Act is, subject to the Act, “with all convenient speed” declare and distribute dividends amongst the creditors who have proved. Mr Combis' bringing of the application unquestionably serves that end, but there is now, on the evidence, an unusual circumstance in the administration of a bankrupt estate.

10    The emergence of a controversy as to whether a statement of affairs has been filed offers an example of a circumstance in which a bankrupt can quite properly be a respondent party to an application under s 146. The interrogative note to which I have referred persuades me that this is a case where the Court should exercise the power conferred by s 30(2) of the Bankruptcy Act to direct an inquiry to be made. That inquiry should not be made at the expense of the creditors in this quite modest bankrupt estate, especially given that the person best placed to answer the inquiry is the official with whom under the Act a statement of affairs must be lodged, namely, the Official Receiver.

11    That inquiry should be informed by the making and filing of affidavit evidence by or on behalf of the bankrupt in respect of the subject of whether or not a statement of affairs was lodged. I propose, therefore, to make directions to the end of the filing of such an affidavit and thereafter the conduct of inquiries by the Official Receiver with the filing and service on the parties of a consequential affidavit attesting to those inquiries and the course of the administration of the bankrupt estate prior to Mr Combis’ appointment as trustee, insofar as that may shed any light at all upon the subject of whether a statement of affairs was lodged.

12    It will also be necessary for the Court to have the benefit of an account by affidavit by the solicitors for Mr Geason and, in particular, the supervisor of a law graduate, a Ms Brydie Sanderson, who communicated with the Court, via my associate directly. On the face of things, and having regard to s 55B of the Judiciary Act 1903 (Cth) (Judiciary Act), Ms Sanderson has no right to practise in this Court, being but a law graduate. It is necessary for the profession to comply with the requirements of practise in this Court as set out in the Judiciary Act. It may be necessary, depending on the account given in that affidavit, to direct the Registrar to refer the papers to a professional regulator.

13    For the present, however, an adjournment is necessary for the reasons given. That adjournment though should not be one where costs are merely reserved. It was possible for Mr Geason, with due dispatch, to have informed those acting for Mr Combis before the course of the hearing today of an evidentiary foundation for the adjournment application. A mere assertion in an April telephone conversation was insufficient in that regard.

14    I therefore propose to order that the costs of and incidental to the adjournment be the applicant Mr Combis’ costs in the proceedings, in any event.

Associate:    

Dated:    31 July 2024