After considering the recent findings of Circuit Court judge Brana Obradovic, iNO was moved this week to contemplate on traits of character, in particular those essential for anyone working with a difficult bankrupt.
“The application was listed for hearing on 2 May 2023. Ms Adorni arrived late to that hearing and gave a narration of her past financial woes and hopes for the future, as well as her criticisms of the Trustee, which were many.” Judge Brana Obradovic.
Tenacity? Patience? Empathy? Each would seem imperative. But when a bankrupt owns four residential properties and controls reserves of cash in excess of her debts yet refuses all invitations, entreaties and demands that she comply with her obligations, only zen-grade detachment can prevent trustee self-harm.
In the case outlined by her honour in Harrison (Trustee), in the matter of Adorni v Adorni [2023] FedCFamC2G 656 trustee Brett Harrison was forced to apply to the courts for orders allowing him to make distributions from the bankrupt estate of Sydney woman Beverley Adorni as if she had filed her Statement of Affairs, even though she had not.
In fact, as the judgment show, Ms Adorni would appear to have difficulty with compliance generally.
“The Trustee has gone to great lengths to inform Ms Adorni of the bankruptcy and her obligation to file a Statement of Affairs, including multiple requests to file a Statement of Affairs, service of relevant documents and engagement with Ms Adorni’s family,” the judge said.
“The Court is satisfied that she is aware of her obligation to do so. Despite this, Ms Adorni has not filed a Statement of Affairs and has failed to cooperate at all with the Trustee in his administration of the estate.”
Lest any reader think that the bankrupt’s aversion to compliance was a result of some unfamiliarity with the personal insolvency process, consider that she was bankrupted a decade ago and the trustee had been forced to seek orders clearing the way for them to act as if she’d filed a statement of affairs when she hadn’t. Sound familiar?
At the time of Harrison’s appointment in February 2022 the bankrupt owned four properties on Sydney’s lower North Shore and Harrison had to sell only one – a two bedroom apartment in Waverton – to realise funds more than sufficient to pay out all creditors.
Principal among them was the Waverton Owners Corporation, which had been the petitioning creditor in the sequestration proceedings on the basis of $27,961 in unpaid strata fees.
Revenue NSW was owed $363,472 in outstanding land tax liabilities and in addition to insuring each of the four properties, the trustee also paid outstanding council rates and had the fence of the bankrupt’s residence in Northbridge repaired.
Clearly Harrison isn’t the only one who’s had to call upon reserves of detachment and after payment of all creditors, Harrison still had a surplus balance of $498,184 in cash.
Exempting his fees and costs from that amount, Harrison wanted to return the three properties and remaining balance to the bankrupt, but couldn’t do so with the statement of affairs outstanding.
The court made the orders he sought and despite the bankrupt’s recalcitrance, what remains of her fortune will be restored.
If there is any dark cloud on her horizon it will relate to correspondence Harrison received from the Australian Tax Office (ATO.
According to the judgment the ATO advised him that while it doesn’t have a claim that may change once Adorni’s personal tax returns from 2014 – 2022 are filed. And as we know, while the ATO has detachment in spades, patience is a diminishing commodity.
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If Tax doesn’t lodge a proof and final distribution approved by the Court (in the particular circumstances) Tax will miss out. Of course, that ont apply to any liability for tax arising during the period of bankruptcy which will be paid as a cost and expense of the administration by the Trustee.