Alan Douglas Kirton v Frieda Alwine Anna Manmgel

[1982] FCA 217

Re: ALAN DOUGLAS KIRTON
Ex parte: THE ABOVENAMED
Re: ALAN DOUGLAS KIRTON
Ex parte: FRIEDA ALWINE ANNA MANNIGEL (1982) 62 FLR 470
No. 289 of 1981
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Fitzgerald J.(1)

CATCHWORDS

Bankruptcy - public examination of bankrupt - public examination of person supposed to be able to give information concerning the bankrupt his trade dealing and property or affairs - examination in respect of affairs of a company of which bankrupt is a creditor - considerations relevant to issue of summons.

Bankruptcy Act, 1966, ss. 69, 81

Bankruptcy - application for discharge - considerations relevant to determining application - application adjourned pending examination under s.81.

Bankruptcy Act, 1966, s. 150

Bankruptcy - Public examination of bankrupt - Premature termination of public examination by Registrar - Bankrupt's application for discharge - Petitioning creditor's application for revocation of Registrar's order - Application for postponement of discharge until examination of named persons - Whether summons to named persons was empowered under s. 81 of Bankruptcy Act 1966 - Whether public examination of bankrupt was satisfactorily carried out - Bankruptcy Act 1966 (Cth), ss. 14, 15, 69, 81, 150 - Bankruptcy Rules, r. 56.

HEADNOTE

The bankrupt borrowed a sum of $20,000 from Mrs. M. and, together with Mrs. M.'s son, Mr. M., acquired a shelf company, Mannigel Broadcasting Co. Pty. Ltd. which was purchased by Concept Service Mart (Qld.) Pty. Ltd. on 11th June, 1980. The bankrupt and Mr. M. had acquired and taken possession in August 1978 of Radio 4VL Pty. Ltd., a broadcasting station in Charleville, Queensland, which was a company associated with Central Queensland Broadcasting Pty. Ltd. The bankrupt's estate was sequestrated on 10th June, 1981, by a judge of the Supreme Court of Queensland exercising federal jurisdiction in bankruptcy following the bankrupt's failure to comply with a bankruptcy notice. The petitioner, Mrs. M., had obtained a judgment in respect of the bankrupt's liability as guarantor of her son's debt.

The public examination of the bankrupt commenced on 16th October, 1981, pursuant to s. 69 of the Bankruptcy Act 1966 and was adjourned by the Registrar to enable the bankrupt to seek legal advice. On 29th January, 1982, the Registrar ordered that the public examination be concluded without any further attendance before him by the bankrupt. The petitioning creditor, Mrs. M., had been represented by counsel at the adjourned examination but was not notified before the Registrar made his order of 29th January, 1982. Mrs. M. took no action when she was so notified in February 1982.

On 23rd April, 1982, less than one year after the sequestration order in respect of his estate had been made, the bankrupt applied for an order of discharge pursuant to s. 150 of the Act. The official trustee's report concerning the bankrupt's application was filed on 29th June, 1982, and did not reveal any special circumstances which would militate against the discharge. On 7th July, 1982, two documents were filed on behalf of Mrs. M., namely a notice of intention to oppose the application for discharge under r. 56 of the Bankruptcy Rules, and an application for orders revoking the Registrar's order on 29th January, 1982. The latter application requested that the bankrupt's application for discharge be adjourned or stayed until the examination was duly completed, and sought a direction to the official receiver that he cause an examination to be made of the directors of Mannigel Broadcasting Co. Pty. Ltd. Mrs. M.'s application was amended at the hearing to seek the postponement of the bankrupt's application for discharge until five named persons, including the wife of the bankrupt, had been examined under s. 81 of the Act.

For the purpose of the latter examination Mrs. M. further sought summonses requiring those five persons to attend before the Registrar to give evidence concerning various specified matters, including the decision of Mannigel Broadcasting Co. Pty. Ltd. to sell its business and main undertaking to Concept Service Mart (Qld.) Pty. Ltd.

Held: (1) The wife of the bankrupt shoudl be summoned as soon as possible to attend before the Registrar to give evidence and to produce books concerning, inter alia, her association with Concept Service Mart (Qld.) Pty. Ltd. and other specified matters limited to information concerning the bankrupt or his trade dealings, property or affairs in accordance with s. 81 of the Bankruptcy Act 1966.

Re Csidei; Ex parte Andrew (1979) 39 FLR 387; Re Alafaci; Registrar in Bankruptcy v. Hardwick (1976) 9 ALR 262, referred to.

(2) The further hearing of the bankrupt's application for discharge would be adjourned until after the conclusion of such examination and the furnishing as soon as possible of a further report in writing by the Official Receiver in Bankruptcy concerning the matter set forth in s. 150(ii) of the Bankruptcy Act 1966.

(3) The application might be restored at any time thereafter by any party upon seven days' notice in writing to the Registrar and to the other parties represented in the proceedings.

(4) The petitioning creditor's applications would otherwise be dismissed.

Semble: The issue of a summons to any of the named persons could not be supported as a legitimate exercise of the power given by s. 81 of the Act.

Per Fitzgerald J. - The circumstances in which the public examination of the bankrupt had been concluded were unsatisfactory and none of the matters specified in s. 150(6) of the Bankruptcy Act 1966 had been established.

HEARING

Brisbane, 1982, September 16-17; October 12. #DATE 12:10:1982

APPLICATION.

The bankrupt applied, pursuant to s. 150 of the Bankruptcy Act 1966, for an order of discharge less than one year after the sequestration order had been made in respect of the bankrupt's estate.

The facts appear in the judgment.

K.F. Watson, for the bankrupt.

J.H. Tuckfield, for the petitioning creditor.

K.M. Mehrens, for the Official Receiver in Bankruptcy.

The Official Receiver appeared in person.

Cur. adv. vult.

Solicitors for the bankrupt: Phillip E. Crook & Co.

Solicitor for the petitioning creditor: C.F. Shirley.

J.D. WHITEHEAD

ORDER

1. Mrs Kirton, wife of the bankrupt, be summoned to attend before the Registrar on a date and at a time and place fixed by the Registrar prior to the issue of the summons to give evidence concerning and to produce any books (whether or not in existence at the time the bankrupt became a bankrupt) in her custody or power relating to her association with Concept Service Mart (Qld) Pty Ltd and the interest in that company held in her name and the circumstances surrounding her acquisition of that interest and the bankrupt's involvement therein and more generally what, if any, connection exists between her, the bankrupt and/or Concept Service Mart (Qld) Pty Ltd with respect to respective positions of herself and the bankrupt with that company and the interest held in her name in that company, but limited to information concerning the bankrupt or his trade dealings, property or affairs in accordance with s.81 of the Bankruptcy Act 1966.

2. Such examination be held as soon as possible.

3. (a) The further hearing of the Application for Discharge be adjourned until after the conclusion of such examination and the furnishing as soon as possible thereafter of a further report in writing by the Official Receiver in Bankruptcy concerning the matter set forth in s.150(iii) of the Bankruptcy Act.
(b) The Application may be restored at any time thereafter by any party upon seven days notice in writing to the Registrar and the other parties represented in the proceedings before me, the date of the adjourned hearing to be fixed by the Registrar after consultation with me.

4. Mrs Mannigel's Applications be otherwise dismissed.

5. Costs of all proceedings before me be reserved and may be made the subject of argument when the bankrupt's application for an order of discharge again comes before me. Orders accordingly.

JUDGE1

1. The Facts

In a Western Queensland community, the local broadcasting station is a district institution. The town of Charleville, boasts such a broadcasting station - Radio 4VL. The bankrupt, Alan Douglas Kirton, became involved in a short-lived but financially disastrous business venture with Mr Gunther Henry Frederick Mannigel, who is also now bankrupt, in which they acquired and for a time operated Radio 4VL. Both seem to have been young men with big ideas but little money.

In early 1978, Mr Kirton was employed in the management of a radio station at Roma in Queensland. He had had several years' experience in broadcasting. At one point in his career, he had worked for the then proprietor of Radio 4VL, Charleville Broadcasting Company Limited.

For some years, he and Mr Gunther Mannigel - then a partner in a camera-shop business at Nowra in New South Wales - had discussed purchasing a radio station. It became known that Radio 4VL Pty Limited, a company associated with Central Queensland Broadcasters Pty Ltd and other interests of Mr F.D. Moore, which had purchased the Charleville station in 1973, was prepared to dispose of its licence and facility for $50,000. Negotiations ensued, and a price of $44,444 was arrived at. A "shelf-company", Mannigel Broadcasting Co Pty Ltd, was acquired and a deed of sale was executed on its behalf. The price was apportioned as to $2,344 for the licence and goodwill, $28,600 for certain personal property used in connection with the business, and $13,500 for land, including the site of the broadcasting equipment. Neither the bankrupt nor Mr Mannigel seems to have had any money.

The bankrupt, for his part, borrowed $4,500 from friends, which was paid directly to the vendors as deposit for the purchase. He understood that that money would be regarded as subscription for 25% of the share capital of Mannigel Broadcasting Co Pty Ltd. A further $20,000 paid in cash to the vendors was borrowed from Mrs Frieda Alwine Anna Mannigel, Mr Gunther Mannigel's mother. The money advanced by Mrs Mannigel was treated as entitling her son to a 65% shareholding in the company. The bankrupt signed a form of guarantee of that loan in which the company was named as the borrower. A further $4,500 of the purchase price was agreed to be treated as having been paid on the basis that Central Queensland Broadcasting Pty Ltd would be regarded as having 10% of the share capital of Mannigel Broadcasting Co Pty Ltd. That left part of the purchase price in excess of $15,000 remaining unpaid. There is some suggestion that that amount was to be reduced because some work needed to be done to the transmitting equipment and the vendor was to be responsible for it. Plainly, however, a substantial amount of the purchase price remained unpaid. The land was never transferred, but the transaction was completed apart from that transfer and the balance payment. Mannigel Broadcasting Company Pty Ltd took possession in August 1978.

A general meeting of that company was held in a Charleville hotel and Mr Gunther Mannigel, Mr Heinrich Oswald Herman Mannigel (his father), Mr Charles Frederick Shirley (a solicitor practising at Nowra who had formerly acted as solicitor for Mr Mannigel), and the bankrupt were appointed directors. Allotment of shares to each of Mr Gunther Mannigel, Central Queensland Broadcasting Pty Ltd, and the bankrupt were approved by resolution. The evidence is that those allotments were never formalized. The bankrupt has, since his bankruptcy, sought to treat the $4,500.00 he paid when Mannigel Broadcasting Co Pty Ltd as a debt which it owes him rather than a subscription paid for shares in its capital. On that basis, he says that it owes him (or rather his estate) a total of about $8,000.00.

Throughout the early period of operations of Mannigel Broadcasting Co Pty Ltd, the bankrupt exhibited what appears to be a singular ignorance of ordinary business practices, which has only been marginally reduced by the shock of recent events. At that time, he had no understanding of the concept of an incorporated company, and was not aware of the difference between lending money to a company and subscribing to shares in a company. He was quite prepared to sign documents without the least knowledge or appreciation of their contents; and, as the Official Receiver states in his report, it appears that the cause of his bankruptcy was his action in guaranteeing certain debts when, according to his evidence, he was not aware of what he was doing. He was party to buying a radio station without, as he said in evidence, "giving much thought" to the state of repair of its transmitting equipment. He admitted in cross-examination that, at the time, he was "not capable of making any decision at all". Similar comments could probably be applied to Mr Gunther Mannigel, who beat Mr Kirton into bankruptcy. On 3 December 1979, Mr Gunther Mannigel became bankrupt in respect of liabilities unconnected with the Charleville radio business, and thereupon ceased to be eligible to act as a director of Mannigel Broadcasting Co Pty Ltd.

During December 1979, the bankrupt sought advice from Mr Grahame St. Clair Burton, a Charleville public accountant and businessman, who had previously been associated with Radio 4VL when it was owned by Charleville Broadcasting Company Limited. As a result, the bankrupt convened an extraordinary general meeting of the company which was held at Charleville on 3 January 1980. Present at that meeting were the bankrupt and Mr Burton, the latter holding a proxy for Radio 4VL Pty Ltd. Neither Mr Mannigel nor anyone acting on his behalf attended. Resolutions were passed removing Mr Shirley as a director and appointing Messrs H.D.J. Fraser, grazier, B.A.F. Nichols, businessman, G.F. Andrews, publican, and Mr Burton, each of whom were prominent local identities, to join the bankrupt as directors. (Mr H.O.H. Mannigel had previously ceased to be a director by virtue of his having entered into a general deed of assignment on 18 May 1970.)

It quickly became apparent to the new directors that Mannigel Broadcasting Co Pty Ltd was hopelessly insolvent and that its affairs were in a terrible muddle. Its unsecured creditors amounted to something like $75,000.00, well in excess of any possible realizable value of its assets. The bankrupt and Mr Gunther Mannigel each gave evidence before me. It is plain that they are antipathetic to each other and that each seeks to blame the other for the failure. An attempt was made to continue trading but, whilst the new Board was perhaps more successful than its predecessors and may have achieved a marginal excess of revenue over outgoings, it was nowhere near sufficient to make any appreciable reduction of the accumulated debt. On the evidence before me, three of the Directors, Fraser, Nichols and Andrews, resigned on 5 March 1980; two of them, Fraser and Nichols, indicated in their respective letters of resignation that they were doing so because they had not been made aware of the company's serious financial circumstances when they accepted appointment. None of these three gentlemen gave evidence and I refrain from speculating as to their motives for joining the Board.

The remaining directors, the bankrupt and Mr Burton, then determined that the only course was to sell the licence and physical assets of the business. There was obvious cause for concern to ensure that the company's financial position did not jeopardise its most valuable asset, the broadcasting licence. In this respect, perhaps Mr Burton was not exclusively motivated by the interests of the company, but also viewed the matter as one of public interest within the small community. That is not to say that I have found any misconduct or impropriety on his part, and I would not regard these proceedings as an appropriate occasion to make such a finding concerning him, although he gave evidence, or any person who was without an adequate opportunity to be heard.

The steps which were taken in the attempt to find a buyer would seem - at least to an outsider, unfamiliar with the usual manner of doing business in a place like Charleville - to be less than comprehensive The business was not advertised, either in the general press or in trade journals. No valuation of the assets was obtained. Rather, the directors confined their efforts to making approaches to members of the local business community whom it was thought might be interested. Even these appear less extensive than might have occurred. Mr Burton justified this course on the basis that, with his experience of selling businesses in Charleville he regarded it as quite hopeless to look for buyers outside town, and, for the purpose of seeking a buyer from within the community, it was unnecessary to advertise. In any event, he regarded the business as a most unattractive proposition to a potential purchaser, and was pleased to obtain a buyer at any price. Again, it is not for me to pass comment on the propriety of the course adopted. Nor should it be overlooked that there were no funds available to mount a massive sales campaign.

The eventual purchaser was a company, Concept Service Mart (Qld) Pty Limited, of which the shareholders were two of the former directors of Mannigel Broadcasting Company Pty Limited, Mr Nicholls and Mr Andrews. As I have said, neither gave evidence before me. The person who subsequently became the bankrupt's wife later bought about 16% of the capital of Concept Service Mart. Mrs Kirton did not give evidence, but the bankrupt said that he thought she paid some four or five thousand dollars for the shares from her own resources. He denied that there was any understanding at the time of the sale that she would subsequently obtain an interest, and indeed asseverated that he did not even know his present wife at that time. It appears that a Mr Gordon, the Shire Chairman, has also since become a shareholder.

Apart from the interests of the former directors Messrs. Nicholls and Andrews, and of Mrs Kirton, concern seems to have been caused in some quarters by the fact that, after the sale, the bankrupt was retained by the new owners and remains in their employment as a radio announcer at 4VL. On the other hand, there is no basis for a suggestion that Mr Burton has any connection whatsoever with Concept Service Mart, either by way of financial or other interest or in any professional capacity. The same is true of Mr Fraser. Likewise, it is clear that Concept Service Mart is in no way linked with Mr Moore or any of his companies.

The terms of the sale contract are summarized in the minutes of a directors' meeting which appears at p.8 of the Minute Book of Mannigel Broadcasting Company Pty Limited:

"Minutes of the Meeting of Directors held at 14 Wills Street Charleville on 28th March 1980. Meeting opened 1 pm.

PRESENT G.S. BURTON - Chairman
A.D. KIRTON - Director
. . .

BUSINESS Moved G.S. Burton Seconded by A.D. Kirton that Concept Service Mart (Q'ld) Pty Limited's offer to purchase the broadcasting assets of the company for $21,700-00 be accepted, recognizing the fact that $15,000-00 of this will have to be paid to Radio 4VL Pty Ltd to enable the company to give title. Carried.

Meeting closed at 1.05 P.M.

(Sgd) G.S. Burton (Sgd) A.D. Kirton
----------------- ----------------
Chairman Director

The contracts which were executed to effect the sale are in evidence; the first, dated 11 June 1980, under the hand of the bankrupt and Mr Burton on behalf of Mannigel Broadcasting Co Pty Ltd recording the sale to Concept Service Mart of

"all the right title and interest of the Vendor in and to a certain radio broadcasting business known as Radio Station 4VL Charleville together with the goodwill of the said business and the stock-in-trade fixtures fittings plant and licenses used by the Vendor in connection therewith",

together with a small parcel of freehold land, for the sum of $6,700; the second recording the sale by Radio 4VL Pty Ltd to Concept Service Mart (Qld) Pty Ltd of one block of freehold and three of perpetual suburban leasehold land, being the greater part of the land occupied by the radio station installation, for the sum of $15,000. It seems that each contract was completed and the various conveyances and transfers effected, although the consideration expressed in the transfers is less than the amount paid to Radio 4VL Pty Ltd and, in some instances, only nominal.

The proceeds of sale appear to have been largely expended on some of the current liabilities of the business, including wages and the electricity account. At about the same time, some $2,000 was paid to the bankrupt in respect of unpaid wages and holiday pay. Mannigel Broadcasting Co Pty Ltd owes much and has nothing, although it continues to exist and a resolution for a voluntary winding-up has not been proceeded with.
2. The Present Proceedings

An order sequestrating the bankrupt's estate was made by Wanstall C.J. in the Supreme Court of Queensland exercising federal jurisdiction in bankruptcy on 10 June 1981, on the petition of Mrs F.A.A. Mannigel, by reason of his failure to comply with a bankruptcy notice which was based on a judgment obtained by her in the Supreme Court in respect of the bankrupt's liability as guarantor of her son's debt. The public examination under s.69 of the Bankruptcy Act 1966 commenced at 10.30 a.m. on 16 October 1981 and, little more than an hour later, was adjourned by the Registrar to enable the bankrupt to seek legal advice. On 29 January 1982, the Registrar ordered that the public examination be concluded without any further attendance before him by the bankrupt. The petitioning creditor had been represented by Counsel at the adjourned examination but, presumably through an oversight, was not notified before the Registrar made that order. She was notified in February 1982 but took no action at that time.

On 23 April 1982, less than one year after the sequestration order in respect of his estate was made, the bankrupt applied under s.150 of the Act for an order of discharge. That section materially provides:

"(1) A person who becomes, or has before the commencement of this sub-section become, a bankrupt may apply to the Court for an order of discharge at any time after
(a) his public examination has been concluded;
(b) the trustee has notified him in writing, that the trustee does not intend to make an application for his examination under section 69; or
(c) the expiration of the period of 12 months commencing on the date of the bankruptcy.
. . .
(3) On the hearing of an application under this section, the Court shall take into consideration a report in writing by the trustee concerning the bankrupt, his conduct, trade dealings, property and affairs both in respect of the period before and the period after the applicant became a bankrupt.
(4) The Court may, in addition -
(a) hear, and put such questions as it thinks fit to
. . .
(ii) a creditor whose debt has been proved;
(iii) the bankrupt; or
(iv) the trustee; and
(b) receive such other evidence as it thinks fit.
(5) The Court shall, if any of the matters specified in sub-section (6) is established -
(a) refuse to make an order of discharge; or
(b) make an order of discharge but suspend the operation of the order as the Court thinks proper, either unconditionally or subject to conditions.
(6) The matters upon the establishment of which the Court may exercise the powers specified in sub-section (5) are as follows:-
(a) that the bankrupt has omitted to keep and preserve such books, accounts or records as sufficiently disclose his business transactions and financial position within the period of 5 years immediately preceding the date on which he became a bankrupt;
(b) that the bankrupt has, after knowing himself to be insolvent, continued to trade or obtained credit to the amount of $100 or upwards;
(c) that the bankrupt has contracted a debt provable in the bankruptcy without having at the time of contracting it any reasonable or prbable grounds of expectation (proof of which lies on him) of being able to pay it after taking into consideration his other liabilities at the time;
(d) that the bankrupt has failed to account satisfactorily to the trustee for any loss of, or depreciation of, assets or for a deficiency of assets;
(e) that the bankrupt has brought on, or contributed to, his bankruptcy by -
(i) rash or hazardous speculations;
(ii) unjustifiable extravagance in living;
(iii) gambling or wagering; or
(iv) culpable neglect of his business affairs;
(f) that the bankrupt has, within the period of 6 months immediately preceding the presentation of the petition on which, or by virtue of the presentation of which, he became a bankrupt -
(i) put any of his creditors to unnecessary expense by a frivolous or vexatious defence to an action brought against him; or
(ii) incurred expense by bringing a frivolous or vexatious action;
(g) that the bankrupt has, within the period of 6 months immediately preceding the presentation of the petition on which, or by virtue of the presentation of which, he became a bankrupt, when unable to pay his debts as they became due, given an undue preference to any of his creditors;
(h) that the bankrupt has been guilty of fraud or fraudulent breach of trust; or
(i) that the bankrupt has been convicted of an offence against this Act or the repealed Act or of any other offence related to his bankruptcy.
(7) The Court shall not, under sub-section (5), suspend the operation of an order of discharge subject to conditions that require, or have the effect of requiring, the bankrupt to make payments from his income at any time after the expiration of the period of 5 years commencing on the date of the bankruptcy.
(8) Notwithstanding that the operation of an order of discharge is, by virtue of an order of the Court in force immediately before the commencement of this sub-section (including such an order as varied after the commencement of this sub-section), suspended subject to conditions that require, or have the effect of requiring, a bankrupt to make payments from his income, the bankrupt is not required to make payments in pursuance of the conditions at any time after -
(a) the expiration of the period of 5 year commencing on the date of the bankruptcy; or
(b) in a case where the period referred to in paragraph (a) expired before the commencement of this sub-section - the commencement of this sub-section.
(9) Where none of the matters specified in sub-section (6) is established, the Court may -
(a) refuse to make an order of discharge;
(b) make an order of discharge; or
(c) make an order of discharge but suspend the operation of the order as the Court thinks proper, either unconditionally or subject to conditions.
(10) The Court shall not, under sub-section (9), suspend the operation of an order of discharge beyond the period of 3 years commencing on the date of the bankruptcy.
(11) The Court may, at any time while the operation of an order of discharge (including such an order made before the commencement of this sub-section) is suspended, rescind or vary the order.
(12) A report referred to in sub-section (3) is, for the purposes of this section, prima facie evidence of the statements contained in it."

The Official Trustee's Report in respect of that Application, filed on 29 June 1982, revealed no special circumstances which would militate against a discharge.

On 7 July 1982, two documents were filed on behalf of Mrs F.A.A. Mannigel. The first was a Notice of Intention to oppose the Application for Discharge, pursuant to Rule 56 of the Bankruptcy Rules, which set out the grounds of opposition as:

"1. The bankrupt has not disclosed valuable assets of which he was possessed at the time of the sequestration of his estate.
2. The bankrupt has a valuable interest in a company called Mannigel Broadcasting Co Pty Ltd and an interest in a company known as Concept Service Mart (Qld) Pty Ltd., the owner of Radio Station 4VL Charleville."

The second document filed on her behalf was an Application for orders revoking the Registrar's Order by which the public examination was concluded and providing that the examination continue and that the application for discharge be adjourned or stayed until it is duly completed. That Application also sought a direction to the Official Receiver that he cause an examination to be made of the Directors of Mannigel Broadcasting Co Pty Ltd.

Insofar as the Application sought to revoke the Registrar's order, it appears to be based on sub-s. 14(5), which provides -

"An order or direction made or given, or an act done, by a Registrar or a Deputy Registrar under this Act is subject to review on summary application to the Court."

The direction sought to be given to the Official Recevier seems to contemplate an exercise of the Court's general power of control (see sub-s. 15(2)) to require him to proceed under sub-s. 81(1) which provides:

"The Court or the Registrar may, on the application of a creditor who has proved his debt and on such terms as to costs as the Court or the Registrar thinks fit to impose, or on the application of the trustee, at any time summon -
(a) the bankrupt or the spouse of the bankrupt; or
(b) a person who is known or suspected to have in his possession any of the property of the bankrupt, or is supposed to be indebted to the bankrupt or to be able to give information concerning the bankrupt or his trade dealings, property or affairs,
to attend, on a date and at a time and place fixed in the summons, before the Court or the Registrar or, if the Court or the Registrar thinks fir, before a magistrate, to give evidence concerning, and produce any books (whether or not in existence at the time the bankrupt became a bankrupt) in his custody or power relating to, the bankrupt or his trade dealings, property or affairs."

At the hearing before me, that part of Mrs Mannigel's application which sought to have the bankrupt's public examination re-opened was not pressed, because it was acknowledged that, as a result of the cross-examination of the bankrupt which took place in these proceedings, there was nothing more that could usefully be achieved. However, it was made clear that she maintains that she would otherwise have been entitled to the orders in question and that she was accordingly entitled to her costs in respect of that part of her application.

The other part of her application was also not pressed before me in its original form, and it appears to have been recognised that, even were I able to give the direction sought, it would not be appropriate for me to do so where it is open to the creditor herself to apply for such an examination (see sub-s. 81(1)). However, the substance of that application underwent a transmutation and emerged, in its final form, that, in addition to her general opposition to a discharge or to a discharge except upon conditions, Mrs Mannigel seeks that that Application for Discharge be postponed until each of Messrs Fraser, Nichols, Andrews and Moore, and the bankrupt's wife, have been examined under s.81. For that purpose she further sought summonses directed to each of them, requiring those persons to attend before the Registrar and give evidence in respect of various matters including:

"(1) Circumstances of decision by board of Mannigel Broadcasting Co Pty Ltd to sell its business and main undertaking to Concept Service Mart (Qld) Pty Ltd.
(2) Why did Radio VL Pty Ltd agree with Concept to sell certain lands for $15,000.
(3) Why do the transfers pursuant to that agreement disclose a consideration of $150.
(4) At what date did B.A.F. Nichols and G.F. Andrews cease to be directors.
(5) What records exist of Mannigel Broadcasting between January 1980 and this date.
(6) Whether the directors of Mannigel Broadcasting took steps to protect the interests of creditors and what were they having in mind the serving of a Sect 122 Notice on 18 March 1980.
(7) Why did certain creditors of Mannigel Broadcasting receive payment in preference.
(8) What was sales and revenue and expenses of 4VL business between January 3 and June 5 1980.
(9) What was real value of assets as at January 5, 1980.
(10) Is there any evidence of recission of deed of sale 1978 between Radio 4VL Pty Ltd and Mannigel Broadcasting - refer Cannan and Petersen letter Exhibit 18."

3. The Application of Mrs Mannigel

I have been relieved of the task of expounding upon s.81 of the Bankruptcy Act by the judgment of Lockhart J. in Re Csidei; Ex parte Andrew (1980) 39 F.L.R. 387. See also Re Alafaci; Registrar in Bankruptcy v. Hardwick (1976) 9 A.L.R. 262, 271.

It is convenient to deal first, but briefly, with the application for a summons directed to Mr Moore. All else aside, it is quite beyond my comprehension why he would be called upon to explain why he did not cause his company to transfer property for which it had not been paid or why he insisted that the ultimate purchaser pay his company direct if it was to receive a transfer of the property. Radio 4VL Pty Ltd was an unpaid vendor. Even if there was a dispute as to what was owed to it, or indeed whether anything was owed at all, it was open to it to take the attitude that, unless it was paid, the property would not be transferred. It was open to the other party or parties to litigate if they disagreed. The impracticality of litigation may have strengthened Mr Moore's position but did not make his conduct questionable. To search for evidence of rescission of the earlier sale to Mannigel Broadcasting Co Pty Ltd is to concentrate on form and ignore reality. The one matter I find puzzling is the consideration expressed in the transfer documents, but that is perhaps explained by revenue considerations. Whether or not that is so, the matter is not a fit subject for examination of Mr Moore under s.81.

The application for a summons directed to Mrs Kirton perhaps raises some different considerations but can nonetheless be conveniently dealt with in part in conjunction with the application for summonses directed to Messrs Fraser, Nichols and Andrews. In summary, what is sought is to investigate the affairs of Mannigel Broadcasting Co Pty Ltd after Gunther Mannigel ceased to be a director, and in particular the transaction with Concept Service Mart (Qld) Pty Ltd and the payments which were made to some creditors out of the proceeds received by Mannigel Broadcasting Co Pty Ltd from the sale.

Put at its highest for Mrs Mannigel, Mannigel Broadcasting Co Pty Ltd may have a claim against some one or more of the persons whom it wishes to examine, Concept Service Mart (Qld) Pty Ltd, or perhaps some person to whom a payment was made by Mannigel Broadcasting Co Pty Ltd. If control of Mannigel Broadcasting Co Pty Ltd were to pass to someone with the will to pursue such claims, the funds necessary for such actions could be found, and if the litigation were to prove successful, there might be some money introduced into Mannigel Broadcasting Co Pty Ltd. Its creditors, including perhaps the bankrupt's estate, might then receive a dividend. It is obvious, even if unimportant, that that would be likely to be small. That dividend might, in turn, lead to some payment to the creditors of the bankrupt, including Mrs Mannigel. It is not suggested that, if the bankrupt had any shares in Mannigel Broadcasting Co Pty Ltd, their value would be affected. The Official Receiver, the trustee of the bankrupt's estate which, like Mannigel Broadcasting Co Pty Ltd, is substantially without funds, was either personally present or represented throughout the proceedings before me. He made it clear that he has no wish to take any further step on behalf of the bankrupt's estate, although, no doubt, were Mannigel Broadcasting Co Pty Ltd to come into funds, he would consider seeking to assert any claim which the bankrupt may have, a matter itself far from clear.

Particularly when regard is also had to other courses open and to the chronology of events in these proceedings, the period allowed by Mrs Mannigel to elapse before any application was made, and the belated extension of her application to its present form, it would be easy to conclude that she was actuated by ulterior motives in seeking the summonses now asked for.

However that may be, it seems to me obvious that the issue of summons to any of the named male persons could not be supported as a legitimate exercise of the power given by s.81 of the Bankruptcy Act, even if what is asked is, which I doubt, literally within the section. I think it preferable to avoid general pronouncements as to how discretions should be exercised but information concerning the affairs of another person who may be a debtor of the bankrupt could scarcely be generally sufficient to justify an order under s.81. 4. The Application for Discharge

There are, however, some additional considerations relevant to the application to summons Mrs Kirton, which also touch upon the bankrupt's application for a discharge. I was very unimpressed by the bankrupt's evidence concerning his wife's interest in the company which presently owns the radio station. During the course of his examination-in-chief, his evidence in respect of this matter was as follows:

"MR WATSON: Mr Kirton, it has been alleged that your wife is a major shareholder in that company - that is, Concept Service Mart Pty Ltd - is that so? --- She most certainly is not a major shareholder, she is a minor shareholder.
Do you know what percentage her shareholding is? --- I believe it to be roughly 16 per cent.
Do you know when she acquired that shareholding? --- She acquired that shareholding - I would have to check, but I would imagine late 1980, in about November.
In relation to the sale to Concept Service Mart Pty Ltd by Mannigel Broadcasting, when was that acquisition made? --- That was on or about 5 or 6 June 1980.
So roughly 5 or 6 months later - - - ? --- At least.
Your wife bought that shareholding? --- She did.
. . .
HIS HONOUR: Do you know what amount she paid for her interest in that company? --- I do not recall off hand, your Honour, but I believe it to be in the vicinity of 4 or 5 thousand dollars."

Then in the course of his cross-examination, after saying that he did not know his wife and that she did not live in Charleville at about 5 June 1980, he gave the following evidence:

"MR TUCKFIELD: In your answer you told us that she acquired a sum of about 16 per cent you believe of the company that now owns Radio 4VL? --- Yes.
How much did she actually pay for the six ---?--- I do not actually know. That is her business. She was not married to me at the time. I did not even know her very well at the time. It is none of my business. Certainly with women's liberation as it is nowadays - I would not even want to know.
And she has never told, has she, what she paid? --- I could ask her. She would probably get her books out and tell me exactly, if I wanted to know.
At the time she acquired this, did she also acquire the house that you are presently living in?
. . .
--- I can sum it up very shortly saying that all of the wife's assets were obtained long before our marriage and our friendship that led to our marriage.
Is there an understanding between you and her or between you and the other shareholders of Concept Service, Queensland, that you will obtain a share in Radio 4VL on your discharge of bankruptcy? --- Certainly not.
Have you had any discussions about that? --- Not to my recollection. Whilst I am not a legal man, I certainly have some understanding of the bankruptcy business."

The bankrupt applied for an order of discharge although 12 months had not expired from the date of his bankruptcy. Although his public examination had, in a sense, been concluded, the circumstances in which that had been done were unsatisfactory. Even now, little more than a year has elapsed from the sequestration order. None of the matters specified in sub-s. (6) of s.150 of the Bankruptcy Act has been established at this point. However, I am not satisfied that full details have yet emerged to establish or negative the existence of any relationship between the bankrupt and his wife with respect to the interest held in her name in Concept Service Mart (Qld) Pty Ltd. What the bankrupt said almost amounts to a challenge to ask his wife if any more is wished to be known. The bankrupt has contributed nothing to his creditors and the terms of his employment by the company in which his wife holds an interest are put forward as making it impossible to do so. Although many creditors were not his creditors but creditors of Mannigel Broadcasting Co Pty Ltd, his involvement in the circumstances leading to their loss cannot be denied. In a very real sense, his ambitions were fuelled by the assets of others. Although incompetence rather than dishonesty may have been the prime reason, he cannot evade all responsibility and there is no sign of any regret except concerning hi own situation. It has been said on many occasions by the courts that regard must be had not only to the interests of the bankrupt and his creditors but also to the interests of the public and to commercial morality. The Court must also consider the bankrupt's conduct relative to his bankruptcy. Mr Kirton should not have a discharge while any cloud hangs over the interest of his wife in the company which now owns the radio station.

In my opinion, the wife of the bankrupt should be summoned to attend before the Registrar on a date and at a time and place fixed by the Registrar prior to the issue of the summons to give evidence concerning and to produce any books (whether or not in existence at the time the bankrupt became a bankrupt) in her custody or power relating to her association with Concept Service Mart (Qld) Pty Ltd and the interest in that company held in her name and the circumstances surrounding her acquisition of that interest and the bankrupt's involvement therein and more generally what, if any, connection exists between her, the bankrupt and/or Concept Service Mart (Qld) Pty Ltd with respect to respective positions of herself and the bankrupt with that company and the interest held in her name in that company, but limited to information concerning the bankrupt or his trade dealings, property or affairs in accordance with s.81 of the Bankruptcy Act 1966.

I direct that such examination be held as soon as possible.

I adjourn the further hearing of the bankrupt's application for an order of discharge until after the conclusion of such examination and the furnishing as soon as possible thereafter of a further report in writing by the Official Receiver in Bankruptcy concerning the matter set forth in s.150(iii) of the Bankruptcy Act and direct that thereafter the application for discharge may be restored by any party upon seven days notice in writing to the Registrar and the other parties represented in the proceedings before me, the date of the adjourned hearing to be fixed by the Registrar after consultation with me.

Mrs Mannigel's applications are otherwise dismissed.

The costs of all proceedings before me are reserved and may be made the subject of argument when the bankrupt's application for an order of discharge again comes before me.