Mistaken identity or fraud? Bankruptcy and the use of an alias

One difficulty encountered by creditors and trustees in bankruptcy is the use of one or more aliases by a bankrupt. Whether it is an innocent use of a nickname or an attempt to conceal one's identity, the use of an alias can often create problems for creditors seeking to pursue debts and for trustees seeking to recover assets held by a bankrupt.

 

How does it happen?

A typical scenario is when a debtor gives a nick name, or a false name, to a creditor during the course of a particular transaction. This can result in subsequent legal proceedings being commenced and judgment being entered in the incorrect name.

What laws are in place to prevent this?

  1. Section 80 of the Bankruptcy Act 1966 requires a bankrupt to immediately notify the trustee of any change in name or change in address. This will apply whether it is a legal change of name or whether the bankrupt simply assumes the use of a different name. A failure to comply with this requirement is a strict liability offence and can result in a penalty of imprisonment for up to 6 months.
  1. Regulation 13.03 of the Bankruptcy Regulations 1966 requires the National Personal Insolvency Index (NPII) to record any alias used by a bankrupt, if known. The NPII is the official register where details pertaining to all bankruptcies are recorded. The NPII is available to the public.

What measures can be put in place to prevent this?

  1. Creditors should carry out due diligence and investigations to ensure that contractual documents reflect the legal names of the individuals that are a party to it. Identity documents such as a driver's licence or passport, together with any change of name certificates, should be requested and carefully considered prior to entering into any agreements. This will ensure that subsequent legal proceedings are brought in the correct name and subsequent judgments are effective.
  1. Creditors should list all known aliases in any legal proceedings or creditor's petition and provide all known aliases to the trustee in bankruptcy. It is permissible to name a defendant as, for example, "Robert Smith (aka Rob Smith)" if that particularly individual has either legally changed his name or has assumed the use of "Rob" in contractual or legal documents and correspondence.
  1. Use of publicly available databases to search legal names, aliases and business names before and during legal proceedings, such as the NPII, Federal Law Search, ABN Lookup and ASIC searches.

Case studies

There are various authorities that have considered the use of aliases by bankrupts, including:
  1. Van Haltren v R [2008] NSWCCA 274 - Use of several false names by an undischarged bankrupt to open bank accounts, obtain credit without informing lenders of the bankruptcy and creating false identity documents. The bankrupt was sentenced to imprisonment for 6 years for all of the offences combined.
  1. Official Trustee in Bankruptcy (as trustee of the bankrupt estate of Williams) v Williams (aka Di-Pietro) [1993] FCA - A property was held in the name of one of the bankrupt's aliases. Compelling evidence was presented to the Court that the bankrupt and the named alias were the same person. A declaration was made by the Court that any property held in the alias name would also vest with the trustee.
  1. Commonwealth of Australia v The Official Trustee in Bankruptcy as Trustee of the Property of Stephen Vasil [2004] NSWSC 1155 - Bank accounts were opened and loans were obtained using multiple fictitious names by a bankrupt. The equitable doctrine of tracing was relied upon to recover some of the funds.

Takeaways

Whilst the use of an alias by a debtor will not necessarily mean that the debtor will be able to pervert the course of justice, it can make matters more complicated and costly to pursue. Creditors should always ascertain the legal identity of an individual and, if possible, identify any aliases used.

Get in touch

If you are looking for advice, please get in touch with our Litigation and Dispute Resolution team today. We have extensive experience in advising all stakeholders, including bankrupts, creditors and trustees, in a bankruptcy context and would be more than happy to assist.

Contributors

Danyal Ibrahim Senior Associate