Tolcher v Thornton [2010] FMCA 739 (17 September 2010)

Last Updated: 30 September 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

TOLCHER v THORNTON

[2010] FMCA 739

BANKRUPTCY – Failure by bankrupt to file a Statement of Affairs – distribution of dividends to creditors.

Bankruptcy Act 1966 (Cth), ss.54, 146

Official Trustee in Bankruptcy v Thor [2006] FMCA 1637 Rees (Trustee) in the matter of Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862

Applicant:

RAYMOND TOLCHER, OFFICIAL TRUSTEE OF THE BANKRUPT ESTATE OF JAMES THORNTON

Respondent:

JAMES THORNTON

File Number:

SYG 1252 of 2010

Judgment of:

Barnes FM

Hearing date:

17 September 2010

Delivered at:

Sydney

Delivered on:

17 September 2010

REPRESENTATION

Solicitors for the Applicant:

Thomsons Lawyers

Respondent:

No appearance

ORDERS

(1) Pursuant to section 146 of the Bankruptcy Act 1966 (Cth) the distribution of dividends amongst the creditors who have proved their debts in the estate of James Thornton shall proceed in accordance with Division 5 of Part VI of the Bankruptcy Act as if the respondent had filed a statement of affairs and those creditors had been stated to be creditors in it.
(2) The costs of and incidental to this application be paid out of the bankrupt estate of the respondent.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 1252 of 2010

RAYMOND TOLCHER, OFFICIAL TRUSTEE OF THE BANKRUPT ESTATE OF JAMES THORNTON

Applicant

And

JAMES THORNTON

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

1. This is an application pursuant to s.146 of the Bankruptcy Act 1966 (Cth) (the Act) seeking an order that a distribution of dividends among creditors who have proved their debts in the estate proceed in accordance with the relevant part of the Bankruptcy Act as if the bankrupt had filed a Statement of Affairs and those creditors had been stated to be creditors in it. The application is made by the trustee of the bankrupt estate of James Thornton.
2. A sequestration order was made in relation to Mr Thornton on 8 May 2008. The petitioning creditor was Fairfax Media Publications Pty Limited. After Mr Thornton was made bankrupt the Trustee attempted on a number of occasions to send a Statement of Affairs to him for completion in accordance with the requirements of the Act. There is evidence before the court (including in the affidavits of Raymond George Tolcher sworn on 26 May 2010 and Sean O’Donnell sworn on 19 August 2010) in relation to such attempts and as to service which I accept. Eventually, the Trustee instructed solicitors to arrange for the Statement of Affairs to be personally served on the respondent. I am satisfied that the bankrupt was personally served with a Statement of Affairs form on 18 July 2008.
3. However, the bankrupt did not respond or file a Statement of Affairs in accordance with the requirements of the Act, in particular s.54 of the Act. The Trustee reported that non-compliance to the Insolvency and Trustee Service of Australia which conducted searches, but was unable to locate the bankrupt. ITSA reported on the result of those searches to the Trustee.
4. Since 18 July 2008 the Trustee has been unable to contact or locate the respondent. When the matter first came before me, orders were made to dispense with any requirement of personal service but to require the Trustee to serve the application on the bankrupt by way of letters sent to all of the known addresses for persons of that name, not just at the address at which the bankrupt had previously been served personally in July 2008.
5. The bankrupt did not attend today, but I am satisfied in the circumstances of the case that the matter should proceed in his absence.
6. Since the Trustee became trustee of Mr Thornton’s bankrupt estate, he has undertaken a number of steps to identify creditors of the estate other than the petitioning creditor. These steps, which are detailed in the affidavit of Mr Tolcher, include sending out notices, advertising a notice of intention to declare a dividend (to which there has been no response), obtaining a creditor information file and notifying potential creditors listed therein. The creditors who have lodged proofs of debt are listed in Mr Tolcher’s affidavit.
7. In addition, following the filing of this application, the solicitors for the Trustee notified known creditors of the estate of the application. They received one reply which indicated that there was no objection from the petitioning creditor. The creditors were also notified of an adjournment.
8. I am satisfied that the applicant has undertaken a considerable number of steps to identify creditors of the estate since the sequestration order was made. I am satisfied on the evidence before the court that the administration of the bankruptcy is complete, save for a distribution of a dividend to the creditors and finalisation of the accounts of the estate.
9. The application is made under s.146 of the Act which applies where a bankrupt has failed to file a Statement of Affairs. It is well established that there are a number of factors to be taken into account in considering whether the court should make an order under s.146 (see in particular Rees (Trustee) in the matter of Stubberfield v Stubberfield (Bankrupt) [1999] FCA 1862 and Official Trustee in Bankruptcy v Thor [2006] FMCA 1637).
10. I have had regard to such matters. The bankrupt has failed to file a Statement of Affairs. The Trustee has made considerable efforts to obtain a Statement of Affairs and I note in that respect that the bankrupt was served personally in 2008 with a copy of a Statement of Affairs for completion. He did not do so. This is not a case of an incomplete or inadequate Statement of Affairs. Rather, there was no response from the bankrupt and the Trustee has not been able to locate him since service was effected. Nor has ITSA been successful in locating the bankrupt.
11. There is evidence before the court that the bankruptcy administration is all but complete, save for distribution of a dividend. Details of the creditors are known to the Trustee who has carried out significant inquiries in order to identify creditors. The amount of the debts that have been proved is set out in the evidence before the court. There are assets available to be distributed to the creditors, including the petitioning creditor. The delay, given all else that has been done, is causing prejudice to the creditors as they do not at this stage have access to such funds as are available.
12. I am satisfied on all the evidence before the court that it is appropriate to make the orders sought by the applicant and to order that the applicant should have its costs of and incidental to this application paid out of the bankrupt estate.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Barnes FM

Date: 29 September 2010