AAT overrules Inspector General over trustee objection

Had the backing of the Inspector General in bankruptcy

Melsom Robson partner George Lopez.

In the decision of Jones and Inspector-General in Bankruptcy [2018] AATA 3260 (5 September 2018) the indispensability of rigour is made abundantly clear.

Back in September 2016 West Australian-based bankruptcy trustee George Lopez lodged an objection under Section 149B with the Official Receiver to the discharge from bankruptcy of Yozique art aficionados, Sharon and Garrick Jones.

The Melsom Robson partner resolved to lodge the objection after deciding that the now ex-bankrupts had failed to adequately respond to his requests for information about their assets and affairs.

This week the AAT found that on balance they had responded adequately but within months of Lopez lodging his objection the Jones requested that the Inspector General in Bankruptcy review it. On January 13, 2017 Lopez’s decision was affirmed.

Suddenly the Jones were facing a 2022 discharge date. On January 28, 2017 they applied to the Administrative Appeals Tribunal (AAT) to have the decision of Inspector General reviewed.

At the heart of the matter is whether at least one special ground for Lopez’s objection existed as per the criteria required under the Bankruptcy Act.

In the its decision handed down on Wednesday this week, the AAT ruled that because failing to comply with requests for information is as serious as failing to comply with a bankruptcy notice, similar requirements of strict compliance with respect to form and content of notices apply to those seeking the information.

“By reason of the Tribunal’s finding that none of the requests for information relied on by the Respondent complied with the requirements of s 149D(1)(d) of the Act, the Tribunal finds that there is insufficient evidence to support the existence of the ground of objection for the purposes of s 149N(1)(b) of the Act and that there is not sufficient evidence to support the special ground specified in the Objection for the purposes of s 149N(1A)(b) of the Act,” the AAT said.

“Accordingly, pursuant to s 149N(1) of the Act the Objection must be cancelled.”

The key issue for Lopez and, it should be observed, the Inspector General which validated his objection, is that many communications from the Melsom Robson offices failed to correctly address the recipients or failed to require information to be provided in writing as required by the Act.

“While some of the communications relied on by the Trustee and the Respondent satisfy some of the elements of s 149D(1)(d) of the Act, none of the communications satisfies the requirement that the request must be a request for the provision of the information in writing,” the AAT said.

“As a result none of the communications relied on by the Respondent as requests for the purposes of s 149D(1)(d) of the Act were valid for the purposes of that section.”

Further reading:

16-400MR ASIC accepts voluntary undertakings from WA liquidators

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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