FEDERAL COURT OF AUSTRALIA Piepkorn v Scott [2004] FCA 1617 HENRIETTE PIEPKORN v ALAN SCOTT No S 209 of 2004 FINN J ADELAIDE 7 DECEMBER 2004 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 209 OF 2004 BETWEEN: HENRIETTE PIEPKORN APPLICANT AND: ALAN SCOTT RESPONDENT JUDGE: FINN J DATE OF ORDER: 7 DECEMBER 2004 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The application be dismissed. 2. The trustee's costs be paid out of the bankrupt's estate. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 209 OF 2004 BETWEEN: HENRIETTE PIEPKORN APPLICANT AND: ALAN SCOTT RESPONDENT JUDGE: FINN J DATE: 7 DECEMBER 2004 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 This application by Ms Piepkorn is a consequence of my decision in Piepkorn v Minister of Employment and Training [2004] FCA 1157. In that matter I dismissed Ms Piepkorn's application as incompetent on the grounds that, as she was an undischarged bankrupt, the cause of action she sought to enforce was and remained vested in her trustee in bankruptcy. 2 In the present application Ms Piepkorn seeks under s 153B(1) of the Bankruptcy Act 1966 (Cth) ("the Act") to have the sequestration order made against her annulled seemingly on the ground that I ought be satisfied the order ought not to have been made. No supporting affidavit setting out the grounds upon which annulment is sought has been filed in accordance with O 77 r 42(1) of the Federal Court Rules. The Court has power to dispense with compliance with the Rules: see O 1 r 8. As no useful purpose would be served either by refusing or by adjourning the application because of the non-compliance with O 77 r 42(1), I intend to dispense with compliance with that rule. BACKGROUND 3 The sequestration order of which Ms Piepkorn complains was made against her estate on 13 March 2000 by Mansfield J of this Court. The act of bankruptcy relied upon in the creditor's petition was a failure to comply with a bankruptcy notice. The debt the subject of the notice was for $2,598.17 plus interest, this debt having arisen as a result of an order for costs made against her in unsuccessful proceedings in the District Court of South Australia against the petitioning creditor Caroma Industries Ltd ("Caroma"). Caroma was her former employer. No appeal was made against that costs order. An unsuccessful appeal was made to the Full Court of this Court against Mansfield J's order. The matters she has now raised orally before me were in part raised in that appeal which I would note was heard and determined on 28 August 2000: see Piepkorn v Caroma Industries [2000] FCA 1230. I will return to this below. 4 This is not the first occasion on which a sequestration order has been made against Ms Piepkorn. This previously occurred in 1993 and she was discharged in 1996. The reason she has not been discharged under s 149 of the Act is that, unlike on the occasion of her previous bankruptcy, she has failed despite repeated initial requests to file her statement of affairs such that the three year period before discharge under that section has not commenced to run. 5 The affidavit filed by her trustee in this application annexed his correspondence with Ms Piepkorn between 17 March 2000 and 31 August 2000 in which he sought her statement of affairs. A letter written on the latter of these dates after the rejection of her Full Court appeal, warned Ms Piepkorn that the three year bankruptcy period would not begin to run until the statement was filed. 6 By failing to file her statement, Ms Piepkorn has in consequence committed a strict liability offence under s 54 of the Act. That section requires the filing of such a statement within fourteen days of the debtor being notified of the bankruptcy. That time requirement could have been, but was not, extended under s 33(1)(c) of the Act: see Nilant v Macchia (1997) 78 FCR 419. 7 The trustee has in 2002, 2003 and 2004 sought information concerning Ms Piepkorn's income for the financial years 2000/2001, 2001/2002 and 2002/2003. The required information was not forthcoming: cf s 77 and s 139U of the Act. 8 I would note that the trustee has not sought to have Ms Piepkorn arrested etc for non-compliance with her obligations under the Act: see s 78; to have her examined under the Act: s 81; or otherwise to facilitate the administration of Ms Piepkorn's estate. I would also note, though, that the only creditor known to the trustee is the petitioning creditor; he has already incurred expenses in excess of $8,000; and there are no funds in the estate. Such other information as his affidavit reveals about Ms Piepkorn's affairs relates to various transfers of real property by her to her parents and then by her parents to her in circumstances that are particularly opaque. 9 There has been a long running battle between Ms Piepkorn and Caroma in respect of events in 1984. The effect of my decision in the matter which precipitated the present application was to thwart Ms Piepkorn's further prosecution of her claims against her former employer and others. The annulment application needs to be seen in that light. As Ms Piepkorn frankly admitted before me, she wants to bring her contract claim against Caroma without being impeded by the trustee. 10 Turning to s 153B, it is only if I am satisfied that, in the circumstances that existed at the time (whether or not then known: Stankiewicz v Plata [2000] FCA 1185 at [19]-[20]), Mansfield J was bound not to make the sequestration order, that I ought consider the annulment of it: Re Frank; Ex parte Piliszky (1987) 16 FCR 396. A decision to annul is a matter of judicial discretion to be exercised in light of the whole of the circumstances including, of present relevance, the lapse of time which has occurred before the making of the annulment application: Delph Sing v Wood (1918) 25 CLR 497. 11 I earlier indicated that Ms Piepkorn filed no supporting affidavit setting out the grounds on which the annulment is sought. She did not seek to file any affidavit at the hearing before me. Nonetheless, she raised before me a number of matters which she considers warrant the annulment of the order. 12 The principal matter raised relates to her ongoing dispute with Caroma which, as I have noted, has been the subject of many actual and attempted (cf O 46 r 7A of the Federal Court Rules) applications to this Court. She asserts that she remains employed by Caroma and from this seemingly it flows that there can be no debt. As I have noted, the debt founding the bankruptcy was in respect of a costs order from which no appeal was made. While there are circumstances in which the Court may go behind a judgment to determine if there is a genuine debt in existence that can found a bankruptcy notice: Wren v Mahony (1972) 126 CLR 212; there is nothing before me at all which could engage that power. 13 Distinctly Ms Piepkorn claims that the costs order was made without jurisdiction, it being asserted that the District Court of South Australia had no jurisdiction to entertain a contract claim. Both Mansfield J and the Full Court considered and, with respect, properly rejected this assertion. 14 A further objection Ms Piepkorn has to the sequestration order is that she believes that bankruptcy carries with it the consequence and the stigma that she is considered not to have the mental capacity to manage her own affairs. Though she is quite mistaken in this, Ms Piepkorn appears convinced of its correctness. 15 Additionally, as I have foreshadowed, she considers the sequestration order should be annulled so that she would be able to pursue her contract claim against Caroma. As long as she remains bankrupt she considers she is prevented from so doing. This complaint, I would indicate, is simply one about a consequence of the making of a sequestration order. It provides no basis in itself for annulment of such an order. 16 I have considered both the judgments of Mansfield J and of the Full Court. No circumstance has been revealed which now indicates that the order ought not have been made by Mansfield J. None of the matters relied upon by Ms Piepkorn suggest to the contrary. For this reason the application must be dismissed. 17 I should add that even if I was satisfied that the sequestration order ought not have been made, I would in light of (i) Ms Piepkorn's conduct since it was made; and (ii) the four year lapse of time before making this application, have refused to annul the order in any event. 18 Had Ms Piepkorn filed her statement of affairs when requested to do so by the trustee, she would in all probability have been discharged long before now. She has been the author of the harm which is the real basis of her complaint i.e. her inability to institute further proceedings against Caroma. 19 I will order that the application be dismissed. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate: Dated: 8 December 2004 Applicant appeared in person. Counsel for the Respondent: Ms N Riach Solicitor for the Respondent: Minter Ellison Date of Hearing: 7 December 2004 Date of Judgment: 7 December 2004