Federal Court of Australia

Vines (Trustee), in the matter of Taylor (Deceased) v Bosnyak [2025] FCA 436

ORDERS

THE COURT ORDERS THAT:

1.    Subject to the following steps being taken by the Applicant, pursuant to s 146 of the Bankruptcy Act 1966 (Cth) (Act), read in connection with s 248 of the Act, a distribution of dividends among the creditors who have proved their debts shall be made as if the Respondent had filed a Statement of Affairs and those creditors had been stated to be creditors in it:

(a)    A Notice of Intention to Declare a First and Final Dividend in the Bankrupt Estate of the late Alan Leonard Brian Taylor (Deceased) (Notice) be published in:

(i)    The West Australian newspaper in Western Australia; and

(ii)    The Australian newspaper nationally.

(b)    No distribution is to be made until 14 days have elapsed after the publications of the Notice referred to in order 1(a);

(c)    No distribution is to be made until a search of the National Personal Insolvency Index is conducted within 48 hours of any proposed distribution and which confirms that no Statement of Affairs has been lodged by the Respondent.

2.    The Applicant provide the Respondent with a copy of these Orders and the reasons for judgment forthwith.

3.    The costs of the application before this Court are to be costs in the Bankruptcy and paid from the Bankrupt Estate.

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

REASONS FOR JUDGMENT

HILL J:

Introduction

1    The Applicant is the trustee in bankruptcy of the deceased estate of the late Alan Leonard Brian Taylor. The Applicant contends that the Respondent (who is the administrator of Mr Taylor’s estate) has failed to file a statement of affairs as required by s 246 of the Bankruptcy Act 1966 (Cth). He seeks orders under s 146 of the Act, as read with s 248, that would permit the distribution of dividends among proved creditors in the absence of that statement of affairs.

2    The Respondent did not attend the case management hearing listed for 2 May 2025. The Applicant took all reasonable steps to put the Respondent on notice that the Applicant might seek final orders at this hearing. I am satisfied that the Respondent has not filed a statement of affairs required by the Act, and that it is appropriate that orders be made under s 146 of the Act (read with s 248). The Court therefore makes the orders sought by the Applicant.

3    Evidence: This application was heard ex parte. The Applicant relies on the following evidence:

Affidavit of the Applicant dated 17 February 2025;

Affidavit of Troy Lindsay Gittos dated 28 February 2025;

Affidavit of Jade Telisha Orr dated 28 February 2025;

Affidavit of service of Bianca Leeks dated 22 April 2025;

Affidavit of Troy Lindsay Gittos dated 1 May 2025.

Legislation

4    Act Pt XI (administration of deceased estates in bankruptcy): Part XI of the Act provides for the administration of deceased persons in bankruptcy. By s 244, a creditor may apply for an order for the administration of the estate of a deceased person, in the circumstances specified.

5    Obligation to provide statement of affairs (Act s 246): By s 246(1), where an order is made under (relevantly) s 244 for the administration of the estate of a deceased person under Pt XI, and there is a legal personal representative of the deceased person, the legal personal representative shall, within 28 days from being notified of the making of the order: (a) make out a statement of the deceased person’s affairs and of his or her administration of the estate, and (b) give a copy of the statement to the trustee of the estate (if, as here, the trustee is a registered trustee: s 246(6)).

6    Petition and order for administration (ss 247, 249): By s 247(1), a person administering the estate of a deceased person may present a petition for an order of administration of the estate under Pt XI, accompanied by a statement, in duplicate, of the deceased person’s affairs and of his or her administration of the deceased person’s estate. By s 249, an order for the administration of a deceased person’s estate has the effect (broadly) of vesting the deceased person’s divisible property and after-acquired property in the registered trustee, which is divisible among the creditors of the deceased person and of his or her estate in accordance with the Act. That is, the division of a deceased bankrupt person usually cannot occur unless a statement of affairs and administration is prepared under s 246.

7    Application of other provisions to Pt XI administrations (s 248): By s 248(1), certain provisions of the Act (relevantly, ss 140 to 147) apply, with any modifications prescribed by the regulations, in relation to the administration of estates under Pt XI of the Act. Section 248(3) sets out certain modifications of those other provisions; for example, a reference to a bankrupt is read as reference to a deceased person in respect whose estate an order for administration has been made under Pt XI (s 248(3)(e)), and a reference to the trustee of the estate of a bankrupt is read as the trustee of the estate of a deceased person in respect whose estate an order for administration has been made under Pt XI (s 248(3)(f)).

8    Distribution of dividends where statement of affairs not filed (s 146): Section 146 of the Act provides as follows for the Court to order a distribution of dividends among proved creditors, when a bankrupt has failed to file a statement of affairs as required by the Act:

146 Distribution of dividends where bankrupt fails to file statement of affairs

Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the Court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.

9    As noted, s 146 is applied by s 248 to the administrations of the estate of a deceased bankrupt under Pt XI of the Act, with certain textual modifications. Schedule 4 to the Bankruptcy Regulations 2021 (Cth) makes the following specific modifications to s 146:

Item 127: omit “a bankrupt”, substitute “the legal personal representative of a deceased debtor”;

Item 128: omit “his or her affairs” (wherever occurring), substitute “the deceased debtor’s affairs”; and

Item 129: omit “bankrupt” (second occurring), substitute “legal personal representative”.

10    It can be seen that s 146 (as modified in its application to Pt XI) refers twice to a “legal personal representative” of a deceased debtor. That term is not defined in the Act; however, on its ordinary meaning it would include an administrator appointed under s 24 of the Administration Act 1903 (WA) (administration in case of intestacy). For example, in Robinson (Trustee), in the matter of Stevanovic; National Australia Bank Limited v Stevanovic (Bankrupt) [2011] FCA 359 at [12], Buchanan J held that an administrator of a deceased estate would have authority to discharge the responsibilities of a bankrupt person, in circumstances where Pt XI did not apply. I would not draw any implied limit from the fact that Sch 4 to the Regulations specifically defines “legal personal representative”, in relation to a deceased debtor, to include the administrator under letters of administration or court order, in relation to other provisions in the Act, but not in relation to s 146.

Background

11    The following background is taken from the affidavit evidence filed by the Applicant.

12    Death of Mr Taylor; appointment of administrator (Aug 2017; Dec 2020): A death certificate annexed to the Applicant’s affidavit indicates that Mr Taylor passed away between 23 and 28 August 2017. On 3 December 2020, the Supreme Court of Western Australia granted letters of administration to the Respondent of the estate of Mr Taylor.

13    Order that estate be administered under the Act (Apr 2024): On 15 April 2024, the Federal Circuit and Family Court of Australia (Div 2) made orders that Mr Taylor’s estate be administered under the Act, on the application of Ms Gwen Taylor as the petitioning creditor.

14    Appointment of trustee in bankruptcy of deceased estate (May 2024): The Applicant is a registered trustee. He was appointed as the trustee in bankruptcy of the deceased estate of the Mr Taylor on 16 May 2024.

15    Trustee conversation with the Respondent (May 2024): The Applicant states that he spoke to the Respondent on 17 May 2024, and that he told her he would be sending her a letter and a statement of affairs for her to complete. On 20 May 2024, a person in the Applicant’s office emailed material to the Respondent of about 60 pages (which included the statement of affairs – form 4), using the email address that the Respondent had given in their conversation.

16    Contacts with the Respondent (Jun-Jul 2024): The Applicant emailed the Respondent on 13 June 2024 about the statement of affairs, and he states that he attempted to call her on 17 June 2024 but she did not answer. He also emailed her on 17 June 2024 asking her to call him as soon as possible. The Applicant states that the Respondent did not respond to the email or phone call. He states that a person in his office spoke to the Respondent on 1 July 2024, and reported that the Respondent stated that she had not seen the earlier correspondence and asked that it be sent again (which it was, on the same day). The Applicant says that the Respondent did not respond to telephone calls from his colleague made on 8 and 9 July 2024.

17    Report to creditors (Jul 2024): The Applicant provided a report to the creditors of the deceased’s estate on or around 17 July 2024. That report provided information about the assets of the deceased estate and the trustee’s proposed remuneration. This report listed two creditors: Ms Taylor (the petitioning creditor), and a local council (which had a statutory charge over the deceased’s real property, in respect of rates that were unpaid at the time).

18    Attempts to contact the Respondent (Aug 2024): On 7 August 2024, the Applicant posted letters to the two known addresses of the Respondent, being an address in Caversham provided by the petitioning creditor’s solicitors, and a different address stated in the letters of administration. The letter to the Caversham address was returned as unclaimed, and the other letter was returned to sender noting that the Respondent was not at that address.

19    Sale of real property (Aug 2024): The Applicant arranged for the sale of the deceased’s real property. That property was sold on 29 August 2024 for $210,000. The unpaid council rates were paid (together with unpaid water charges) from the proceeds of sale. The same person in the Applicant’s office sent the Respondent an email on 21 August 2024, advising the Respondent that the property would be sold, asking her whether she had any claim in the estate for expenses incurred as an administrator, and asking her to advise on the preparation of the statement of affairs. The Applicant is informed that the Respondent did not reply to that email.

20    Trustee’s lawyers attempt to contact the Respondent (Sept 2024-Jan 2025): The Applicant states that, on or around 4 September 2024, he instructed lawyers to assist in obtaining a statement of affairs from the Respondent. Mr Gittos, a lawyer at Murfett Legal, describes in his February 2025 affidavit the steps that were taken to contact the Respondent. In summary:

Murfett Legal engaged a process server, who advised him that the address for the Respondent in the electoral roll (the Caversham address previously identified) was no longer current.

The Respondent did not respond to a call made on 10 October 2024, and a text message sent on the same day failed to send to the mobile number that Mr Gittos had been given by the Applicant. The Respondent did not respond to an email sent on 14 October 2024 to the email address for the Respondent that had been provided by the Applicant.

Mr Gittos identified from an internet search the name of the Respondent’s employer, and its postal address (but no physical address). He called the employer’s telephone number and spoke to the Respondent on 18 and 21 October 2024. Mr Gittos says that he explained to her on 21 October that he acted for the trustee in bankruptcy for the estate of Mr Taylor, and that she needed to complete a statement of affairs. He asked the Respondent for an email address.

On 24 October 2024, Mr Gittos emailed documents to the email address provided by the Respondent. However, that email received a server error message, which stated that the message was rejected.

Mr Gittos tried calling the Respondent at her work on 1 and 5 November 2024. She did not answer those calls.

On 8 November 2024, Ms Orr, a legal assistant at Murfett Legal, rang the Respondent at her work. Ms Orr states that the Respondent answered the call, but on being told that Ms Orr was calling from Murfett Legal, said words to the effect of “I told you people not to contact me at work anymore” and hung up. Ms Orr’s affidavit is to the same effect.

On 19 November 2024 and then on 21 January 2025, Murfett Legal posted a letter including a statement of affairs form to the postal address for her employer as listed on its website. Murfett Legal has not received a response.

21    Notice to creditors (Dec 2024): On 10 December 2024, an advertisement was placed in The Western Australian newspaper, requesting that any creditor of Mr Taylor’s estate provide the trustee with their proofs of debt by 10 January 2025. The Applicant had not received any other proofs of debt at the time of his affidavit. The Applicant states that, based on his review of the books and records of the estate, and the fact that Mr Taylor owned only one property in Western Australia, he believes that Mr Taylor lived and was based solely in Western Australia, and that it is not necessary to advertise in any other States or Territories in Australia.

22    The Applicant states that he has taken the following steps to identify potential creditors of the estate:

obtaining a credit report in respect of Mr Taylor;

writing to 46 banks and enquiring whether Mr Taylor had accounts with any of those banks (and if so whether any amounts were owing);

reviewing Mr Taylor’s bank statements and records; and

asking the Australian Taxation Office whether there are any tax debts in respect of Mr Taylor.

The Applicant has not identified any other creditors, apart from Ms Taylor (the petitioning creditor).

23    Value of estate (at Feb 2025): The Applicant states that, at the date of his affidavit, he held funds in the amount of $117,840.38 that are available for distribution to Ms Taylor (the petitioning creditor). He states that the time taken to complete the distribution of the estate could depend on whether the funds presently available are sufficient to satisfy all of Mr Taylor’s debts: if they are not, the Applicant may, if commercially viable, conduct further investigations to determine whether to seek to take possession of, and sell, certain unregistered vehicles that are believed to have been owned by Mr Taylor.

24    The Applicant states that he believes that Ms Taylor is being prejudiced by the failure of the Respondent to complete a statement of affairs, because he is unable to pay a dividend to Ms Taylor until either a statement of affairs is provided, or any order is made by this Court.

25    Originating application (Feb 2025): On 26 February 2025, the Applicant filed an originating application, seeking orders under s 146 of the Act that would permit the trustee to make a distribution of dividends among the proved creditors of the deceased estate, subject to the Applicant taking the following steps:

a.    A Notice of Intention to Declare a First and Final Dividend in the Bankrupt Estate of the late Alan Leonard Brian Taylor (Deceased) (Notice) be published in The West Australian newspaper in Western Australia;

b.    No distribution is to be made until 14 days have elapsed after publication of the Notice;

c.    No distribution is to be made until a search of the National Personal Insolvency Index is conducted within 48 hours of any proposed distribution and which confirms that no Statement of Affairs has been lodged by the Respondent.

26    Service on the Respondent (Mar and Apr 2025): Ms Leeks has provided an affidavit of service. That affidavit shows that, on 19 March 2025, a letter was posted to the postal address of the Respondent’s employer which contained the originating application and the affidavits of the Applicant, Mr Gittos, and Ms Orr. On 9 April 2025, a letter was posted to the same address attaching the Applicant’s written submissions in these proceedings, and which included the following information about the hearing on 2 May 2025 (original emphasis):

4.    The Proceedings have been listed for a case management hearing at 11:30am AEST/9:30am AWST on 2 May 2025.

5.    We enclose a copy of the email we have received from Justice Hill’s Associate advising of the date and time of this hearing.

…

8.    … you can request assistance from the Court by contacting Justice Hill’s associate at [email address] or on [telephone number].

9.    The Court will potentially hear and determine our client’s application at the hearing. If you do not attend, the Court may make orders in your absence.

27    Position as at 1 May 2025: Mr Gittos in his May 2025 affidavit sets out the position as at 1 May 2025 in relation to three matters:

(1)    Mr Gittos searched the National Personal Insolvency Index (NPI Index) on 1 May 2025 in respect of Mr Taylor, the deceased. The extract from the NPI Index indicates that a statement of affairs has not been lodged.

(2)    Mr Gittos states that Murfett Legal has not received from the Respondent a statement of affairs; and has not received a response to either of its letters dated 19 March 2025 (sending her the application documents) or 9 April 2025 (sending her notice of the 2 May 2025 hearing).

(3)    Mr Gittos states that a personal insolvency accountant employed by the Applicant informed Mr Gittos on 1 May 2025 that:

(a)    the Applicant and his staff have as at 1 May 2025 not received the statement of affairs from the Respondent, nor any response by the Respondent to the documents sent to her by Murfett Legal (set out above); and

(b)    the creditor of Mr Taylor’s estate identified in the Applicant’s affidavit (that is, Ms Taylor) has been informed of this application, and the date and time of hearing of the application.

Consideration

28    Ex parte application: The Respondent did not appear at the hearing on 2 May 2025. There is strictly no requirement under the Act that any party be named as the respondent and no obligation on the trustee to serve the application on any other person: Roufeil (Trustee), in the matter of Jarvie (Bankrupt) [2015] FCA 232 at [12] (Gleeson J); Barnet (Trustee), Re Zhang (Bankrupt) v Zhang [2017] FCA 924 at [28] (Lee J). However, I am satisfied that the Applicant has taken all reasonable steps to bring this application to the attention of the Respondent, so as to afford her the opportunity to be heard on whether she has failed to file a statement of affairs. This information was sent by registered post on 9 April 2025 to the only available address of a business where the Respondent is known to work, in circumstances where the Applicant’s lawyers have been unable to find the Respondent’s residential address, and she is not responding to calls or texts to the only mobile phone number known to the Applicant nor to emails sent to email addresses provided by the Respondent herself: see [16], [20], [28] above.

29    I am therefore satisfied that it is appropriate to deal with the matter in the Respondent’s absence: see Sampson (Trustee), in the matter of Condon (Bankrupt) [2016] FCA 312 at [12] (Perry J).

30    Further, I am satisfied that it is appropriate that I make final orders at this case management hearing, rather than incurring any further expense and delay by scheduling a further hearing. That course is permitted by the Federal Court Rules 2011 (Cth), r 5.08. The Applicant has taken all reasonable steps to put the Respondent on notice that the Applicant might ask the Court to make final orders at this hearing: see [26] above.

31    General principles for s 146 applications: The purpose of s 146 is “to give the Court the means of ensuring that the absence of a statement of affairs does not prejudice those with an interest in the bankrupt’s affairs”: Official Trustee in Bankruptcy, in the matter of Shaw [1999] FCA 968 at [4] (Gyles J).

32    Two questions arise on an application under s 146 of the Act: Jarvie at [5]; Sampson at [15]:

First, whether the relevant person (here, the Respondent) has failed to file a statement of affairs as required by the Act; and

Second, if yes, should the Court in the exercise of discretion make an order under s 146 (here, as applied by s 248(1)) that distribution of dividends among the creditors who have proved their debts in the estate of the deceased person proceed in accordance with ss 140 to 147 of the Act (again, as applied by s 248(1)).

33    For the following reasons, I would answer yes to both questions.

34    Has the Respondent failed to file a statement of affairs? On the first question, it is not necessary to establish a wilful refusal or neglect to file the statement of affairs; a mere omission will suffice: Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649; (2001) 117 FCR 1 at [13]-[14] (Sackville J).

35    The letters of administration establish that the Respondent is the “legal personal representative” of Mr Taylor, the deceased creditor, which means she is the person who is liable under s 246 of the Act to prepare a statement of affairs. On the evidence before the Court, I am satisfied that the Respondent has not filed a statement of affairs to date: the Applicant, a registered trustee, has given sworn evidence to this effect, and there is no reason to doubt that evidence. The NPI Index indicates that, as at 1 May 2025, a statement of affairs has not been lodged: see [27](1) above. Separately, the proposed orders would require the Applicant to provide the Respondent with a copy of the orders forthwith once they are made, and to search the NPI Index within 48 hours of any proposed distribution, to confirm that the Respondent has not filed a statement of affairs: see [25] above.

36    Is it appropriate to make an order under s 146? The second question is whether it is appropriate in the exercise of discretion to make an order under s 146 of the Act. On this question, Sackville J stated in Sturt at [19]:

… the Court must be satisfied that it is appropriate to make an order. The Court may need to be satisfied, for example, that creditors have been notified of the application and have had an opportunity to be heard (although ordinarily the application would be made in the interests of creditors). As in this case, the Court might require evidence that the trustee has taken appropriate steps to ascertain whether there are creditors, other than those who have come to its attention by filing a proof of debt or otherwise.

37    As noted, the Applicant has given evidence of the searches he has undertaken to identify the creditors of Mr Taylor: see [22] above. The Applicant states that the only creditor he has identified is Ms Taylor, the petitioning creditor, to whom the proposed distribution would be made. Mr Gittos’s evidence is that Ms Taylor has been informed of the application, and the 2 May 2025 hearing: see [27](3)(b) above. The Respondent, as administrator, may also have a claim on the estate of the deceased, but she has not responded to attempts by the Applicant to contact her. In addition, the proposed order would require the Applicant: to publish a notice in The West Australian newspaper stating that the Applicant intends to declare a first and final dividend over Mr Taylor’s estate; and not to make any distribution until 14 days after the publication of that notice: see [25] above.

38    The Applicant has explained why he believes it is not necessary to publish a notice in any other State or Territory: see [21] above. That view is not unreasonable, but the Court would have greater assurance that any potential creditor has been identified if notice were also given in a national newspaper. With that additional step, I am satisfied that the Applicant has undertaken, and will undertake, appropriate steps to identify the creditors of Mr Taylor and his estate.

39    The Applicant’s evidence is that he holds funds of more than $100,000 from Mr Taylor’s estate that are otherwise available for distribution. He is unable to distribute any funds until either a statement of affairs is provided by the Respondent, or this Court makes the orders sought under s 146. The Respondent was obliged by s 246(1) to prepare a statement of affairs within 28 days after being notified of the orders made under s 244 of the Act. That time has long passed. The evidence before the Court indicates that it is unlikely that the Respondent will prepare a statement of affairs. The Applicant states, and I accept, that Ms Taylor is being prejudiced by the Respondent’s failure to prepare a statement of affairs, because he is unable to pay a dividend.

40    The purpose of s 146 is to ensure that a creditor is not prejudiced by a failure to provide a statement of affairs: Shaw at [4]. In the circumstances of this case, it is appropriate that the Court make the orders sought.

41    Costs: The Applicant seeks an order that the costs of this application be costs in bankruptcy, and payable from Mr Taylor’s estate. This order would engage the priority given by s 109(1)(a) of the Act. By s 32 of the Act, the Court has a general power to make “such orders as to costs as it thinks fit”. Further, by s 90-15(3)(d) of Sch 2, the Court has a specific power to make “an order in relation to the costs of an action (including court action) taken by the trustee of the estate or another person in relation to the administration of [a regulated debtor’s] estate”. These proceedings were necessary to enable the Applicant to continue to administer Mr Taylor’s estate. I note that similar costs orders were made by Sackville J in Sturt at [20], by Buchanan J in Stevanovic (order 3), by Lee J in Zhang at [30], and by Logan J in Meagher and Cronan (Trustee), in the matter of Laguzza (Bankrupt) v Laguzza [2024] FCA 314 (order 4). I therefore make the costs order sought.

ConclusioN

42    The Court will make the orders sought in the originating application, subject to requiring notice be given in a national newspaper (as well as The West Australian), and requiring the Applicant to send the Respondent these reasons for judgment, as well as the orders made.

Associate:

Dated:    2 May 2025