FEDERAL COURT OF AUSTRALIA Official Trustee in Bankruptcy v Koski [1999] FCA 756 No question of principle OFFICIAL TRUSTEE IN BANKRUPTCY v LEAH KOSKI N 7503 OF 1999 HELY J 1 JUNE 1999 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7503 OF 1999 BETWEEN: OFFICIAL TRUSTEE IN BANKRUPTCY Applicant AND: LEAH KOSKI Respondent JUDGE: HELY J DATE OF ORDER: 1 JUNE 1999 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 146 of the Bankruptcy Act 1966, the distribution of dividends to those creditors who have proved their debts in the bankrupt estate of Leah Koski, proceed in accordance with Division 5 of Part VI of the Bankruptcy Act 1966 as if the bankrupt had filed a Statement of Affairs and those creditors had been stated to be creditors in it. 2. The costs of this application be costs in the estate. 3. If after six months the bankrupt Leah Koski has not applied to the applicant for payment to her of any surplus, that surplus be paid to consolidated revenue pursuant to s 254 of the Bankruptcy Act 1966. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7503 OF 1999 BETWEEN: OFFICIAL TRUSTEE IN BANKRUPTCY Applicant AND: LEAH KOSKI Respondent JUDGE: HELY J DATE: 1 JUNE 1999 PLACE: SYDNEY EXTEMPORE REASONS FOR JUDGMENT 1 On 12 November 1996 a sequestration order was made against Leah Koski on a petition presented by the Deputy Commissioner of Taxation. By letter of 15 November 1996 Leah Koski was notified that she had been made bankrupt on 12 November 1996 by an order of the court and she was notified of the requirement that she file a statement of affairs. Section 54 of the Bankruptcy Act 1966 ("the Act") provides that where a sequestration order is made, the person against whose estate it is made shall within 14 days from the day on which he or she is notified of the bankruptcy, make out and file in the office of the Official Receiver, a statement of his or her affairs. 2 Mrs Koski did not comply with that requirement notwithstanding repeated requests on the part of the Trustee that she should do so. The reason that she gave for not lodging a statement of affairs was that she disputed the debt of the Deputy Commissioner of Taxation, the petitioning creditor. Again the Trustee urged her, on more than one occasion, to submit to him any material which she wished to be considered in connection with the decision on the part of the Trustee whether or not to admit the Commissioner's proof of debt. She did not take advantage of that invitation. The Commissioner lodged a proof of debt in the sum of $273,453.27 plus interest and costs and that proof was supported by a judgment obtained in the Supreme Court. The Trustee accepted the proof. 3 Mrs Koski's substantial asset was a house property at Greenwich that was sold by auction earlier this year. The last occasion on which the Trustee had any contact with Mrs Koski was on 3 March 1999 when she sat in the front row of the auction being conducted at the Greenwich property. After her eviction from that property she moved to a place called the Greenwich Inn. As a result of the sale of the Greenwich property there are sufficient funds to pay the debt which has been proved, that is to say the debt of the Commissioner of Taxation, leaving a surplus of some $90,000 which would accrue to Mrs Koski. 4 Section 146 of the Act provides that where a bankrupt has failed to file a statement of his or her affairs as required by the Act, the Court may, on the application of the Trustee, order that the distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with Division 5 as if the bankrupt had filed a statement of his or her affairs and the creditors had been stated to be creditors in it. The Trustee seeks an order to that effect which I am prepared to make. 5 When the matter first came before me, the Trustee applied ex parte. I directed that an attempt should be made to serve Mrs Koski with the application. Affidavits of Sally Nash of 31 May 1999 and two affidavits of Melanie Scott each of 31 May 1999 have been filed deposing as to the probable whereabouts of Mrs Koski and as to attempts to contact her, none of which have been successful. When called outside the court this morning she did not appear. 6 In those circumstances I am prepared to make orders in accordance with the short minutes of order which I have amended, signed and placed with the papers. The effect of those orders is that: Ÿ First, pursuant to s 146 of the Bankruptcy Act 1966 I order the distribution of dividends to those creditors who have proved their debts in the bankrupt estate of Leah Koski proceed in accordance with Division 5 of Part VI of the Bankruptcy Act 1966 as if the bankrupt had filed a statement of affairs and those creditors had been stated to be creditors in it. Ÿ Second, the cost of this application be costs in the estate. Ÿ Third, if after 6 months the bankrupt Leah Koski has not applied to the applicant for payment to her of any surplus, that surplus be paid to consolidated revenue pursuant to s 254 of the Bankruptcy Act 1966. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely. Associate: Dated: 1 June 1999 Solicitor for the Applicant: S Nash & Co Date of Hearing: 1 June 1999 Date of Judgment: 1 June 1999