Background
Stephen Robert Dixon, trustee of Ian Peter Templer’s bankrupt estate, sought permission under s 146 of the Bankruptcy Act 1966 (Cth) to distribute dividends to creditors who had proved their debts. Templer had not filed the statement of affairs required by s 54, despite repeated requests from the trustee.
The trustee identified two creditors: Bupa Aged Care Australia Pty Ltd, with a proved debt of $128,572.54, and the Australian Taxation Office, with a proved debt of $2,619.47. The trustee had received $234,589.27 from Templer’s joint Bendigo Bank account, which was sufficient to pay the known creditors, trustee costs and remuneration, and potentially permit annulment of the bankruptcy. The trustee had also identified jointly owned South Australian property, but considered its sale unnecessary.
The Court’s Holding
Stewart J granted the trustee permission to distribute dividends despite Templer’s failure to file a statement of affairs. Section 146 gives the Court a discretionary power to permit distribution in those circumstances; it does not prescribe express limits or preconditions.
The Court found that the trustee had made reasonable and repeated efforts to obtain Templer’s cooperation, including contact by registered post, email and telephone. Templer had notice of the application but did not appear. Further attempts to secure a statement of affairs were unlikely to succeed.
The trustee had also done what could reasonably be expected to identify assets and creditors without the statement. Refusing the order would delay finalisation of the bankruptcy to creditors’ disadvantage, whereas the available funds were sufficient to pay the known proved debts and bankruptcy expenses. The application costs were ordered to be costs in the bankruptcy.
Key Takeaways
- A bankrupt’s failure to file a statement of affairs does not necessarily prevent creditor distributions.
- Under s 146, the Court may permit distribution where it is appropriate to do so in the interests of creditors and proper estate administration.
- Relevant considerations include the trustee’s efforts to obtain the statement, identify assets and creditors, and whether further efforts would be productive.
Why It Matters
The decision confirms that s 146 can prevent an uncooperative bankrupt from indefinitely stalling the administration of an estate. Trustees should retain evidence of their efforts to obtain a statement of affairs and to identify creditors and assets through other available means.
It also underscores that where known creditor claims can be met from realised funds, the practical interests of creditors may favour prompt distribution and finalisation over awaiting compliance that is unlikely to occur.