QLD Chances of Debt Recovery from an Undischarged Bankrupt?

[daryl tosch]

Hi.
Seeking help on a rather complex situation... 3 separate issues with same undischarged bankrupt (i'll call him Joe - not his real name ) in qld.

1. Joe & his partner entered a residential lease agreement with me in Sep 2013. Partner vacated several months later. Joe remained in the house until Mar 2015, however ceased making rent payments in Jul 2014. Rent arrears $12,600

2. Joe purchased a car from me in Sep 2013 for $10,400... Ceasing payments with $5,600 outstanding balance shortly after he "wrote off" the car.

3. Joe was a friend, thus he was aware I was looking to renovate my house. Joe, was a building designer and thus to enable debt recovery of above 2 items I entered a design agreement with him for my house renovation. Unbeknownst to me, Joe had deliberately misled me with regard to his licence for design work and with regard to the standard of execution / professionalism he intended to provide. He apparently had no intent to follow the industry standard management procedures included in the agreement he issued and invoiced against. Email confirming his position after design dispute arose. The design is 10months late, does not comply with design brief and can not be licenced. Fees paid $21,400

Joe continues to work now doing design work for cash - by his own admission.

Looking for help regarding the path forward for recovery of rent arrears, car payments and claim for design breaches, etc... Knowing Joe is an undischarged bankrupt - are there chances of recovery?

RTA dispute resolution has been requested for rental arrears...QCAT has been contacted about design dispute... Mediation via Dept Justice also initiated.

Other than suing Joe for car payments, I'm unsure as to how to proceed with this... Purchase agreement was unsecured ( trust based )

Quite a mess really, trying to find a path forward.

All suggestions appreciated.

 

[James D. Ford - Solicitor]

Hi Daryl

When did Joe (I know it is not his real name!) become "Bankrupt"?

Any debts incurred after he became Bankrupt, are not extinguished by his Bankruptcy, and are still able to be pursued.

I assume that Joe had all his dealings with you after he became Bankrupt, is that right?

Though it does not sound like he has much to pay you with... but is doing work, and does have an income.

Please advise.

Kind regards

 

[daryl tosch]

Hi James,

appreciate your response.

Yes, these are all new debts after Joe was declared bankrupt.
His bankruptcy was mid 2012 I think - my dealings started Sept 2013

As mentioned, Joe was a friend, thus house and car agreements were entered with him on trust basis as he was not able to get a rental property or car finance after bankruptcy. It was my understanding ( from him ) that the bankruptcy people made both impossible, they apparently even sold his car to pay debts ( because it was too expensive or something like that rid). Thus as a friend, knowing he needed a vehicle for work and was working, plus the fact I was moving to Thailand for 2-3years with my work I entered a weekly payment arrangement with him ( on the basis repayment after bankruptcy contributions was still within his budget ). Received confirmation from him that both rent and car payments would be easily met - and he did pay for first 6months.

I agree it seems he doesn't have much to pay me with, alas he charges $110/hr as a design consultant and has completed at least 2 design projects in the last year... I believe he has far more $ than he declares to the bankruptcy trustee - I actually suspect he has performed other projects on cash basis to avoid declaring the income.... as this was his preference with me ( I declined, opting for a proper agreement inc. GST component ).

I further suspect he tailored his Lump Sum design fee to be lower than the 2 other prices I received, noting he has never been advised of competitors prices ( or price range ). The fee he issued me was higher than 1 quote lower than the other. I am a design manager ( petro- chemical / processing plants ) and I specifically requested a copy of the management procedures he would follow before signing the agreement. I reviewed them and signed the agreement, expecting professional execution from him for the fee paid.

He claims he never intended to manage the design and didn't include cost in the Lump Sum price for management, thus did not deliberately misled me by issuing procedures he never intended to follow. He never communicated anything like this to me. He has 20+years in design & building thus is well aware all design work needs to be managed. There are PC Sums exist for Drafting & Engineering in the agreement, but no exclusions are noted or were discussed. I requested an incisive Lump Sum from him, so his price could be compared to the other prices received.

I was not aware his design license had been revoked / cancelled etc at time of signing the design agreement with him. The agreements actually states the type of license he supposedly had... And his first proposal ( rejected ) to resolve atters was for me to engage a builder to license and warrant the design - ie voiding the need for him to be licensed > and is apparently how he worked around the issue with the other designs he completed.

He has been paid in advance for design work.

 

[James D. Ford - Solicitor]

Hi Daryl,

He owes you more than $5k. This is the minimum amount required to force someone into Bankruptcy.

On this basis, if you pursue him... if he discharges his Bankruptcy.. you could make him Bankrupt all over again... obviously, this is not Plan A.. but you need to have some leverage over him... to motivate him to pay you the sums he owes.

If you are unsuccessful with the RTA dispute resolution - I suggest you continue to QCAT which is a low-risk, low-cost way to enforce obligations... and you can convert the decision to an enforceable Magistrates Court order - so I highly recommend you pursue this avenue, as you have a written residential lease agreement to enforce.

Was the car that was written-off insured? Who collected the insurance money?

I also recommend QCAT for the design dispute (if they have jurisdiction, I highly recommend you commence an application for the same reasons are provided above).

Kind regards