Auto Group Ltd v England

[2008] NSWSC 402

Reported Decision: 6 ABC (NS) 72

New South Wales

Supreme Court

CITATION:	AUTO GROUP LTD v ENGLAND [2008] NSWSC 402
HEARING DATE(S):	18/04/2008
JUDGMENT DATE :	2 May 2008
JURISDICTION:	EQUITY
JUDGMENT OF:	Bryson AJ
CATCHWORDS:	BANKRUPTCY - proveable debts s 82 exception in s 82(2) - companies sued former Managing Director for tort damages for amounts of money he had misdirected in payment of false invoices and payroll ghosts - consideration whether claims were not provable in bankruptcy as "in the nature of unliquidated damages" and "arising otherwise than by reason of a contract, promise or breach of trust" - excursus on whether breach of fiduciary duty is "breach of trust" - HELD, claims were liquidated debts in Equity, claims arose by reason of a contract, the debts were provable debts and the proceedings could not be disposed of in the absence of leave of Federal Court under s 58(3)(b).
LEGISLATION CITED:	Bankruptcy Act 1966, s 44, s 58(3)
CASES CITED:	Alexander v Ajax Insurance Limited [1956] VLR 436 Aliferas v Kyriacou (2000) 1 VR 447 Britter v Sprigg (1900) 26 VLR 65 Charter Pacific Corporation Ltd v Belrida Enterprises Pty Ltd [2003] QCA 375, 179 FLR 438 Chittick v Maxwell (1993) 118 ALR 728 Coventry v Charter Pacific Corporation Ltd [2005] HCA 67, 227 CLR 234 at [66] Cutten and Harvey v Mount (1988) 14 ACLR 662 Emma Silver Mining Co. v Grant (1880) LR 17 Ch D 122 Gardner v Duve (1978) 19 ALR 695 Re Giles Ex Parte Stone (1889) 61 LT (NS) 82
PARTIES:	Auto Group Limited - Plaintiffs Mark England - Defendant
FILE NUMBER(S):	SC 1646/2006
COUNSEL:	N Bearup - Plaintiffs N/A - Defendant
SOLICITORS:	Henry Davis York Lawyers - Plaintiffs N/A - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON AJ

2 May 2008

1646/06 AUTO GROUP LTD v MARK ENGLAND

JUDGMENT

1 HIS HONOUR: The plaintiffs sue Mr England for damages for the tort of deceit committed on each of many occasions when he fraudulently directed payment of funds of one of the plaintiffs for purposes of his own, not being purposes of the plaintiffs or otherwise proper applications of their funds. At the times of the events Mr England was the managing director of the first plaintiff and was completely in control of its day-to-day affairs, so that he was in a position to direct other staff to make payments. He filed a Defence, but his solicitors withdrew from the record shortly before the hearing and he did not appear and was not represented at the hearing before me. His Defence contains many admissions to the effect that he requested and authorised payments; he does not admit the frauds alleged, but the plaintiffs were entitled to rely on his admissions so far as they extend.

2 As the defendant is and remains a bankrupt it is for consideration whether s 58(3) of the Bankruptcy Act 1966 applies; if that section does apply it will limit the competency of the plaintiffs to commence the present proceedings or take any fresh step; so that the plaintiffs will not be in a position to obtain my disposition. The leave of the Federal Court under s 58(3) has not been obtained nor has it been applied for. Section 58 restricts proceedings "in respect of a provable debt": see subs (3)(a). The plaintiffs’ claims are not claim for provable debts if the claims fall within the exception to s 82(1) created by s 82(2):

(1) Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
…
(2) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.

3 The concepts of a liquidated demand and of unliquidated damages in procedural law are illustrated by the judgment of Sholl J in Alexander v Ajax Insurance Limited [1956] VLR 436 where the law was reviewed and shown to be complex. These concepts are to be understood by reference to the history of procedural law and of the Money Counts. In respect of each of the many torts of deceit which the plaintiffs allege there could be no room for doubt about how damages should be assessed; the amount of money misappropriated is the amount of damages. It does not follow from the relative simplicity of this exercise that the damages are liquidated damages. Damages are liquidated where their assessment is substantially a matter of calculation as a result, usually, of some contractual provision which establishes the amount of damages to be paid in some event and does not leave damages for assessment. Damages are unliquidated in all cases except those where there is some contractual or statutory mechanism which provides means of calculating the damages without any process of assessment. Where damages are to be assessed on principles of the law of damages, however simple the process may be, they are unliquidated.

4 But Equity has its own approach where there are fraudulent misappropriations of money in breach of trust. The trustee’s obligation to make good the breach of trust is treated as “a species of equitable debt”: see Re Vassis: Exparte Leung (1986) 9 FCR 518 (Burchett J) and texts and authorities cited by Burchett J at 526-527. In my opinion the liability incurred by Mr England for breach of fiduciary duty in misdirecting payments of the plaintiffs’ funds is an equitable debt in this case, where the plaintiffs’ claim although in form a claim for tort damages is in substance a claim for restitution of the misappropriated money, as they do not seek any wider inquiry into the loss.

5 Subsection 82(2) creates an exception which itself contains a further exception: "… arising otherwise than by reason of a contract, promise or breach of trust …".

6 In Chittick v Maxwell (1993) 118 ALR 728 Young J at 738 when setting out submissions by counsel said "[Counsel] puts that in considering whether the claim is one for unliquidated damages arising by reason of a contract, promise or breach of trust one looks to the underlying transaction rather than to the form of action." Although Young J did not in terms say so his Honour's consideration at p739 shows that this proposition was accepted; analysis at page 739 lines 44 and following appears to be an application of the submission. To the same effect are observations in Coventry v Charter Pacific Corporation Ltd [2005] HCA 67, 227 CLR 234 at [66] to the effect that "… framing a claim as a claim in tort does not conclude the question whether the demand arises by reason of a contract or promise". This proposition is well-established.

7 The opening word “demands” has not dominated the approaches taken by courts to the application of s 82(2); the terms of the demand, or the way the claim is framed are of less significance than consideration of the underlying transaction. The plaintiffs’ claim is expressed as a claim in tort but it could conceivably have been expressed as a claim for breach of contract, relying on an implied contractual obligation of an employee in a responsible position, such as a managing director, to act faithfully towards his employer. As would often happen, the “underlying transaction” can be accurately and well categorised as a claim under tort law for fraud and deceit; but equally accurately and well as a claim in Equity for breaches of fiduciary duty; the fiduciary is required to account for the payments he misdirected; he cannot give a reason which discharges himself and he is required to pay over the balance. What the section requires is not so much a decision on the true categorisation of the underlying transaction; there may be several true categorisations, but what is for decision is whether the demand arises by reason of a contract, promise or breach of trust, or arises otherwise than by reason of a contract, promise or breach of trust. A demonstration that a debtor is liable for damages in the tort of deceit is not a demonstration that the demand is ‘arising otherwise by reason of a contract etc’. Section 82(2) requires (at least) two categorisation exercises, one relating to the nature of the damages and one relating to whether the demand arises by reason of a contract or promise. One exercise does not conclude the other, and apparent anomalies may have to be disregarded.

8 I will embark on an excursus on what is meant in s 82(2) by “breach of trust”. All the conduct alleged against Mr England can be readily recognized as conduct in breach of fiduciary duty owed to the first plaintiff. Young J made observations at 739 with some bearing on what is referred as "breach of trust" in s 82(2) in the course of reviewing case law and a passage in McPherson on Company Liquidation Third edition p 375 which establish that there is a tendency to give a narrow interpretation to the exclusionary aspect of s 82(2). There is not either in the sources referred to or in Young J's judgment support for the view that "breach of trust" refers to liabilities for breach of fiduciary duty generally, and the passage cited from McPherson does not state to the effect that breach of fiduciary duty always falls within "breach of trust" in s 82(2). To say that would in my opinion be incorrect because it would not be justified by the language used in s 82(2). Young J’s relevant conclusion at 739 line 22-25 relates only to "breach of trust in the strict sense". Further, as it was Young J's decision that the liability in the case before him arose out of a contract or promise, the observations on breach of trust were not part of the grounds for decision.

9 Weinberg J considered the operation of s 82 in Re Sharp Ex parte Tietyens Investments Pty Ltd [1998] FCA 1367. As appears by Weinberg J’s conclusions, the claims under consideration were claims for a proof of debt against solicitors in respect of their conduct of investment business for clients and it was (with respect) plainly correct for Weinberg J to say:

These claims were based in part at least upon the contractual relationship which existed between those individuals and those who ultimately lost their investments. They therefore arise "by reason of a contract".

10 Weinberg J went on to some observations which do not seem to have been necessary for his Honour’s decision:

They also appear to me to involve allegations of "breach of trust". In Chittick v Maxwell (1993) 118 ALR 728 Young J at 738-739 explained the operation of s 82 of the Bankruptcy Act . His Honour emphasized the width to be accorded to the concept of a debt or liability provable in bankruptcy in that section. His Honour's analysis of Ex parte Llynvi Cole and Iron Co ; re Hide (1871) LR 7 Ch App 28 at 31-32 per James LJ; Britter v Sprig (1900) 26 VLR 65 and 82; Cutten and Harvey v Mount (1988) 14 ACLR 662 at 667, and Re Vassis ; ex parte Leung (1986) 9 FCR 518 at 527 provides a cogent rationale for the modern tendency to give a narrow interpretation to the exclusionary aspect of s 82(2). Claims of the type which are presently contemplated in the draft statement of claim involve allegations of moral turpitude and breach of fiduciary obligation on the part of each of the three prospective defendants. They are, therefore, allegations of "breach of trust" within the meaning of that expression in s 82(2).

11 In my respectful view the last sentence went beyond what could be supported by Chittick v Maxwell or by the cases to which Young J referred. Young J emphasised the width to be accorded to the concept of a debt or liability provable in bankruptcy in s 82, and provided a cogent rationale for a tendency to give a narrow interpretation to the exclusionary aspect of s 82(2). However in my opinion nothing in Young J's judgment supports an observation that allegations of moral turpitude and breach of fiduciary obligation are allegations of breach of trust within s 82(2). There is no expression to that effect in the judgment of Young J, and Weinberg J’s observations involve a striking departure from the ordinary and natural meaning of "breach of trust".

12 In Ex parte Llynvi Coal and Iron Co. (1871) LR 7 Ch App 28 the Court was not dealing with a predecessor of s 82, but with a section authorising (very widely) disclaimer of onerous contracts. There is no reference to breach of trust.

13 In Britter v Sprigg (1900) 26 VLR 65 shareholders representing a Building Society sued directors who had misapplied moneys of the Society by paying themselves and others commission on business introduced to the Society, contrary to its rules. The issues included whether a director had been discharged from this claim by insolvency, depending in turn on whether his obligation was provable in insolvency. The opening passage of s 114 of the Insolvency Act 1890 was:

Demands in the nature of unliquidated damages arising otherwise than by reason of a contract or promise shall not be provable in insolvency.
Save as aforesaid all debts and liabilities present or future certain or contingent … shall be deemed to be debts provable in insolvency, and may be proved in manner aforesaid.

The section made further extensive provisions including a very wide definition of "liability" but did not refer to "breach of trust".

14 At 82 Madden CJ speaking for the Full Court said:

We think, upon interpretation of sec. 114 of the Insolvency Act 1890, that this obligation is one provable in insolvency. We think that upon the verbiage of the statute the section is one which, though confused and indefinite, it is exceedingly comprehensive, and that this obligation is a debt provable in insolvency. This opinion is confirmed by the case of The Emma Silver Mining Co. v Grant , wherein it is declared that the obligation of a director who is in a fiduciary position may be considered that of a contractor, so that he must observe the principles of his trust and not contravene them, and that a breach of his obligation not to make such a payment as this would be a breach of trust. We think the relationship of a director to his company is on this principle contractual. It is therefore within section 114.

15 The Full Court was not confronted with a problem of deciding whether a claim should be categorised on the one hand as arising by reason of a contract or on the other hand as arising by reason of the breach of trust. Although s 114 was significantly different in its terms to s 82, the analysis on which the Full Court acted, relating to the director’s contractual obligation to conform to fiduciary duty, appears to be available in the case before me.

16 Emma Silver Mining Co. v Grant (1880) LR 17 Ch D 122 (Jessel MR) was a decision on s 49 of the Bankruptcy Act 1869 (U.K.):

An order of discharge shall not release the bankrupt from any debt or liability incurred by means of any fraud or breach of trust, nor from any debt or liability whereof he has obtained forbearance by any fraud.

17 This is not recognizably a predecessor of s 82. The debtor was a financial agent and promoted the company for the purchase of a mine; the vendors gave him part of the purchase money without the knowledge of the company and he was liable to the company for this secret profit. Jessel MR held that this was a liability incurred both by means of fraud and also by breach of trust. It is, with respect, difficult to see what support Madden CJ drew from this decision. Emma Silver Mining Co. v Grant is however important for the clear statement by Jessell MR of what is a breach of trust: see 128-130.

18 Cutten and Harvey v Mount (1988) 14 ACLR 662 (SCSA O'Loughlin J) was a decision on s 82(2), applied in the winding up of a company under the Companies (South Australia) Code. The company had incurred liability for fraudulent misappropriation by one of its directors of a cheque which was then paid into the company's account. O'Loughlin J held that there was a breach of trust by the company, and that the liability could be proved in a liquidation. O'Loughlin J adopted a formulation of the claim in which the company incurred liability for breach of trust. In doing so his Honour said (at 667): "Adopting a liberal interpretation of s 82 (but bearing in mind that the words breach of trust should receive their proper technical legal meaning: Emma Silver Mining Co. v Grant …) it seems to me that one would be wholly justified in formulating a claim by Cutten and Harvey against the company in these terms …” [and his Honour stated the formulation at length, leading to the conclusion that the claim was provable in the winding up.] With respect, there seems no room for doubt that the proceeds of the cheque in the Company’s account were impressed with a trust in favour of the true owner of the cheque and proceeds.

19 In Re Vassis Ex parte Leung (1986) 9 FCR 519 (Burchett J) the Court was not concerned to apply s 82 but to consider whether the petitioning creditor had shown a debt within s 44 of the Bankruptcy Act which was "a liquidated sum due partly at law or partly in equity." The petitioner was a receiver of a solicitor under the Legal Profession Practice Act 1958 (Victoria) and according to that Act was entitled by subrogation to the rights and remedies that clients had against the solicitor by reason of pecuniary loss suffered arising out of a defalcation by the solicitor. The solicitor had fraudulently obtained money on forged mortgages on land of clients whose title deeds he held. Burchett J for reasons stated at 526-527 held that the moneys fraudulently obtained were and could be treated as an equitable debt owed by the solicitor to the client and were not unliquidated damages.

20 There have more recently been several cases in which higher courts have addressed the operation of s 82(2). The decision of the Court of Appeal of Victoria in Aliferas v Kyriacou (2000) 1 VR 447, followed by the Court of Appeal of Queensland in Charter Pacific Corporation Ltd v Belrida Enterprises Pty Ltd [2003] QCA 375, 179 FLR 438 was disapproved by the High Court of Australia in Coventry v Charter Pacific Corporation Ltd [2005] HCA 67, 227 CLR 234 in which there was a review in the leading judgment at 243 [22] and following of the history of s 82 and its predecessors. This consideration, which was very extensive, did not involve examination of claims for breach of trust in the context of s 82; they were referred to only incidentally at 249[37], 252[46] and 253[55]. Their Honours did refer (at 251[45] to 252[49]) to Re Giles Ex Parte Stone (1889) 61 LT (NS) 82 where, on a distant predecessor of s 82, Cave J in the passage cited by the High Court at [46] treated fraud claims separately from breaches of trust.

21 The case law referred to by Weinberg J does not in my respectful opinion support the conclusion that claims which involved allegations of moral turpitude and breach of fiduciary obligation are allegations of breach of trust within s 82(2). In my opinion the misappropriations by Mr England were not breaches of trust within the meaning of that expression in subs 82(2); that expression relates to breaches of trust in the strict or (it might be said) correct meaning of those words. In my opinion the words "breach of trust" in subs 82(2) do not extend and are not appropriate to extend, according to the ordinary meaning of language, to a liability arising for breach of fiduciary duty of a fiduciary who is not also a trustee; applying this observation to relevant facts, Mr England was not a trustee as no property was vested in him on trust, and whatever other liabilities in equity he might incur, he would not incur liability for breach of trust by using his fiduciary position to misdirect property of the plaintiffs.

22 Many breaches of trust are breaches of fiduciary duty but a breach of fiduciary duty is not necessarily a breach of trust; there is no contextual or other reason for giving "breach of trust" in s 82(2) a meaning other than its ordinary meaning, applicable only where there is an identifiable trust, trustee, equitable owner and trust property. These have no application on the present facts. This brings the excursus to an end: there is no breach of trust, but this does not establish whether the plaintiffs’ claims fall within the references to “a contract or promise”.

23 In my opinion the present claims are not demands in the nature of unliquidated damages within subs 82(2); equitable obligations of restitution where moneys are fraudulently obtained by fiduciaries are treated in equity as debts, and as liquidated debts, and are not in my opinion demands in the nature of unliquidated damages. Further, although the claims can be categorised as claims for damages for torts, they do arise by reason of breaches of fiduciary duty which occurred in a contractual context, and they are no less arising "by reason of a contract" if they can also be placed within another category. In concluding in this way I follow the line of reasoning in Britter v Sprigg and the principal line of reasoning in Re Sharp Ex parte Tietyens Investments. For each of these reasons the plaintiffs’ claims are provable in bankruptcy under s 82(1).

24 Mr England was presented before the County Court of Victoria on five counts of offences under ss 83A and 82.1 of the Crimes Act 1958 (Victoria) relating to obtaining financial advantages by deception and making false documents to induce acts to another person’s prejudice. He pleaded “guilty” and was convicted. The particulars of those counts can be readily related to most (although not all) of the claims made in these proceedings. On 5 December 2007 the County Court (his Honour Judge Bourke) imposed sentences on the presentment with a total effective sentence of 5 1/2 years imprisonment and a minimum term before eligibility for parole of 3 1/2 years. Mr England is still undergoing imprisonment.

25 Mr England made very extensive admissions in the course of an interview, which was recorded and transcribed, conducted at Northcote Crime Investigation Unit on 8 March 2006 by Detective Sergeant Flannery, in the presence of several other police officers and of Mr Mamouzelos, an investigator who was concerned in the interest of the plaintiffs. He made further extensive admissions in the course of an examination before Deputy Registrar Durkin in this Court on 13 December 2006 in the liquidation of the first plaintiff; the transcript is in evidence. In the course of the interview and examination he made several points which might be thought to have had a mildly exculpatory tendency but which, even in their own terms when the whole of what he said is taken into account, did not in any real way tend to establish the existence of authority from the plaintiffs for any of the payments made, or otherwise establish that Mr England’s conduct was not intentionally fraudulent. A suggestion which may have had the effect that some of Mr England's conduct may have been authorised by Mr Richard Moffitt a non-executive director was completely disposed of by evidence given by Mr Moffitt.

26 One large group of frauds alleged related to a firm called Doctors Kennels which conducted the business of greyhound breeding at Darriman, Victoria, in which Mr England was a principal, both as owner of the premises and as a partner in the business. Mr England created many false purported tax invoices and in one instance a cash receipt purportedly addressed to the first plaintiff or some related entity for payment of obligations which in fact had been incurred in connection with Doctors Kennels; he directed the tax invoices or gave them to Naomi Radley, an accounts clerk at the first plaintiffs’ head office at Enfield, New South Wales, in circumstances which showed that he required her to pay the named supplier as if the purported invoice recorded an obligation of one of the plaintiffs. In a generally similar way he created a number of tax invoices and documents apparently recording purchases of vehicles by entities related to the first plaintiff, a common event in the first plaintiffs’ business; the documents were false and there were no corresponding vehicles. In generally similar ways he brought it about that the first plaintiff paid a number of obligations for the benefit of a business of which he was the sole shareholder referred to as Cleanway and another business referred to as Le Tissier. He also caused the second plaintiff to make what were purportedly salary payments to persons employed by or connected with Doctors Kennels, to whom no payments were due by either plaintiff.

27 The proofs for the first plaintiffs’ claims are illustrated by a document called "Schedule of Evidence relied on by plaintiff in proceedings 1646 of 2006" which plaintiffs’ counsel handed to me during the hearing on 18 April. The schedule is to remain on the file. It should be referred to so as to understand fully these reasons. It contains references to the large mass of evidence which was tendered before me, and for each claim made by the first plaintiff it shows the evidence in support of the plaintiffs’ claim that the defendant caused the payment to be made and did so fraudulently. For most of these payments particulars in the County Court presentment show that the payment was the subject of one of the criminal charges to which the defendant pleaded guilty; and in these cases the plea of guilty taken with other material referred to in the schedule provides overwhelming proof of the plaintiffs’ case. I have checked the references in the schedule and with a few exceptions I have found them to be correct. If I were to decide these proceedings my findings would be based on the support which the evidence referred to in the schedule gives to the plaintiffs’ claims.

28 Two items were not pressed and I have rejected them namely (page 41) Rodwells & Co. $1,994.47. (Page 43) Rodwells & Co. $1,980.46. I have rejected a few of the claims in the “Schedule of Evidence relied upon by the plaintiff in proceedings 1646 of 2006” because the material referred to is not evidence of a clear admission or other clear evidence of the defendant’s liability. For claims relating to Gippsland Sheds and Fencing (or similar names) the evidence does not dispel the defendant’s reference to work done for Auto Group Properties by Gippsland Sheds and Fencing and I have rejected those not charged in the presentment. The rejected items are:

(Page 2) Goodwin Constructions $61,232.72. There are two claims for $61,232.72 but the evidence supports only one claim, so I have rejected one.
(Page 4) Gippsland Sheds and Fencing $6,437.61.
(Page 16) MDK Pty Ltd $4,785.
(Page 37) S. Reynolds (Reynolds and Reynolds Sign Writing) $10,000.
(Page 38) S.R Murphy Holdings Pty Ltd trading as Murphy Salvage and Demolition $5,000.
(Page 40) Nixon Management Services $9,900.
(Page 41) S & J Lothian trading as Woodside Service Station $2,287.83.

29 The claims in the Schedule total $1,983,805.51, the claims I have rejected total $103,618.09 and the amount I would allow to the first plaintiff is $1,880,187.42.

30 The claims relating to salary payments to persons not employed by either plaintiff are alleged in paragraphs 19 to 27 and 64 to 81 of the Statement of Claim. These are denied in the Defence. They were not the subject of criminal charges. The substance of the claims was admitted in Mr England's record of interview, and I would find that the claims were made out and that the second plaintiff should recover the amount claimed. Claims in respect of employees of Doctors Kennels whose salaries the defendant caused to be paid by one or other of the plaintiffs, which I would be prepared to allow are these:

Auto Group Ltd – Michael Hooper $ 86,256.00
William McMahon 4,000.00
Judith McMahon 4,000.00
$ 94,256.00

Auto Group Dandenong Pty Ltd
William McMahon $ 56,480.00
Judith McMahon 56,480.00
$112,960.00

The plaintiffs claimed $90,256.00 for payments to Michael Hooper but the Group Certificates in evidence show $86,256.00.

31 The plaintiffs’ counsel sought to limit the tenders of the record of interview and the examination transcript to admissions and to include purportedly exculpatory material. It was my opinion that procedural fairness required that if the admissions in these documents were to be relied on, the whole of each document should be received into evidence including the purported exculpations. It is not my opinion that the plaintiff having put the documents in is bound by the whole of them including the purportedly exculpatory material. In my opinion statements like these, including exculpatory material, should be considered in the context of the whole body of evidence, and I am not when finding facts bound to come to any particular conclusion by the fact that an exculpatory statement has been made in any document which contains relevant admissions; it is open to me to attach different weight to different parts of a document containing admissions. This view is in accordance with observations in Cross on Evidence [33455] where very numerous authorities are referred to. I was particularly assisted by the judgment of McGregor J in Gardner v Duve (1978) 19 ALR 695 at 700-704 where his Honour extensively reviewed case law on this and related subjects.

32 The plaintiffs’ proceedings are proceedings which it is not competent for them to bring, having regard to s 58(3) of the Bankruptcy Act. That being so, I am not prepared to come to any conclusion or to make any order unless and until the plaintiffs obtain leave of the Federal Court of Australia under s 58(3)(b). The plaintiffs may decide to prove in the bankruptcy and to seek to avoid the effect of discharge from bankruptcy, when and if Mr England obtains a discharge, by invoking s 153(2)(b) of the Bankruptcy Act. If the plaintiffs decide to proceed in this way it will nonetheless continue to be inappropriate for me to take these proceedings any further unless and until the leave of the Federal Court is obtained. If the plaintiffs were to obtain leave they could ask for my further consideration. However in my understanding they are unlikely to do so as their objective is to remain outside the bankruptcy.

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