Butler v Pattison

[2002] FMCA 106

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BUTLER v PATTISON & ANOR [2002] FMCA 106

BANKRUPTCY – Review of Registrar’s Decision – s.104(2) Federal Magistrates Court Act, Rule 20.03A Federal Magistrates Court Rules, Division 4B, ss.139ZU, 149D B–N, Bankruptcy Act.

Applicant: LUKE NORMAN BUTLER

First Respondent: PAUL A PATTISON

Second Respondent: MARK WILLIAM PRENTICE

File No: BZ 174 of 2002

Delivered on: 16 April 2002

Delivered at: Brisbane

Hearing Date: 13 April 2002

Judgment of: Rimmer FM

REPRESENTATION

Counsel for the Applicant: Mr Anderson of Counsel

Solicitors for the Applicant: Morgan Conley, Solicitors of Brisbane

Solicitors for the First Respondent: First Respondent appeared in person

Solicitors for the Second Respondent: No appearance by the Second Respondent

ORDERS

1. That the APPLICANT is granted permission to leave Australia and travel overseas to continue to derive income for the period 6.30am
   14 April 2002 until midnight on 26 April 2002.

2. That Morgan Conley solicitors be permitted to release to the APPLICANT his passport for the purpose of the travel permitted by this order.

3. That within 24 hours after returning to Australia, the APPLICANT return his passport to his solicitors who shall hold it subject to further order.

4. That the parties have liberty to apply.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BZ 174 of 2002

LUKE NORMAN BUTLER

Applicant

And

PAUL A PATTISON

First Respondent

And

MARK WILLIAM PEARCE

Second Respondent

REASONS FOR JUDGMENT

1. This matter is listed this morning for judgment.  These reasons for judgment are delivered ex tempore after an urgent hearing conducted this past weekend. It is an application for review of a Registrar's decision with respect to an order made by Deputy Registrar Baldwin to adjourn the application for permission to leave Australia pursuant to section 139ZU of the Bankruptcy Act sine die.  This decision was made by the Deputy Registrar on 12 April 2002 as a result of an urgent application filed by the bankrupt, LUKE NORMAN BUTLER, that same day, and heard by the Deputy Registrar late on Friday afternoon.

2. The review application is made pursuant to section 104(2) of the Federal Magistrates Court Act and pursuant to Rule 20.03A of the Federal Magistrates Court Rules. This rule provides that the review of an exercise of a power by a Registrar must proceed before a Federal Magistrate by way of a hearing de novo.  This application is brought and listed urgently at 4 pm on Saturday, 13 April 2002.  After hearing the application late into the evening I reserved the reasons for decision but made orders which the parties already have.

3. The reason for the urgent listing will be canvassed in full and the relevant background facts to this application.  In short, the applicant wishes permission to depart from Australia the following morning, being Sunday, 14 April 2002, his flight being scheduled to depart Australia through the Brisbane Airport at 6.30 am on that day.  The orders sought by the applicant are as follows: 

   (1)That an order be made pursuant to section 139ZU of the Bankruptcy Act 1966 Commonwealth that the applicant be permitted to leave Australia and travel overseas to continue to derive his income;

   (2)That Morgan Conley Solicitors be permitted to release to the bankrupt his passport for the purpose of the travel permitted by this order; and

   (3)Liberty to apply.

4. The application is opposed by the first respondent, the Trustee in Bankruptcy in Victoria, Mr Paul A. Pattison, through his assistant in the administration of this estate, Ms Susan Agnew. 

Background

1. On 7 February 2002 the bankrupt, Luke Norman Butler, was made bankrupt pursuant to section 66 of the Bankruptcy Act when two events occurred. Firstly, he caused a debtor's petition to be lodged with the Brisbane office of the Insolvency and Trustee Services of Australia, ITSA, and pursuant to that petition, Mark William Pearce, the second respondent, was appointed as trustee. On the same day, 7 February 2002, a sequestration order was made against the bankrupt in Victoria, and Mr Paul A. Pattison, the first respondent, was appointed as trustee.

2. There are, at present, therefore, dual administrations of Mr Butler's bankrupt estate, and the question of which will take precedence has not yet been resolved.  Mr Butler's passport was then given by him to his solicitor, Morgan Conley Solicitors, and is currently held by his solicitor, Mr Conley, of that office pending resolution of the dual administration of Mr Butler's estate.  Mr Butler was at the time of his bankruptcy a director of a company, Global Air Leasing Proprietary Limited, ACN number 0906290118.

3. This company is in the business acquiring and leasing large commercial aircraft, as well as offering flight-chartered service.  Mr Butler is employed by Global Air since his bankruptcy as a consultant having resigned as a director upon being made a bankrupt.  He is not involved, he says, in its management.  His evidence is that he provides his expertise in the industry to its director, Ms Simone Butler, his wife, the in-house legal counsel, Mr Maxwell Mead, and aviation advisor, Mr John Lynch.  This evidence is supported by the evidence of Simone Butler, and is set out in affidavits which are filed by the applicant both on 12 and 13 April 2002, and affidavits filed by Simone Butler on

   
   

   12 and 13 April 2002.

4. Mr Butler's evidence, supported by the evidence of Ms Butler, the sole director of Global Air, is that his role in the company as a consultant is principally to ensure that the knowledge and expertise that he has in the operation and commercial use of Global Air's aircraft, and the history of the company's dealings remain available to that company.  Those facts are particularly relevant in relation to his request for permission to travel overseas because he says that in particular, and urgently at this point in time, those dealings are with the Government of Comores. 

5. Mr Butler was provided with certain benefits from Global Air as his income.  Those include the use of a motor vehicle for private use, the use of a mobile phone, and travel expenses.  Details of those were provided to the first respondent, Mr Paul Pattison, in writing by Mr Butler on 13 March 2002.  He has been assessed by the first respondent to make a contribution to the trustee for a period 7 February 2002 to

   
   

   6 February 2003 under Division 4B of the Bankruptcy Act, and this contribution assessment is set out in exhibit 1 in the proceedings which were held before Deputy Registrar Baldwin on 12 April 2002.

6. The assessment is dated 11 April 2002.  The contribution assessment has been calculated on the following fringe benefits which the trustee maintains Mr Butler receives from Global Air.  Accommodation, $15,000; payments under a lease and hire purchase of 13,200; telephone, gas and electricity of 2400; airline transport of 20,000; motor vehicle expenses of 7880; living expenses of 15,000; and payment of mobile phone of $600.  The contribution payable by Mr Butler is assessed by the first respondent for the stated period as $21,019.45. Further he is required to pay the assessed amount by ten instalments of $2101.95, the first instalment being due on or before

   
   

   30 April 2002.

7. Mr Butler's case is that he is required by Global Air to travel to the Federal Republic of Comores to finalise urgent negotiations to endeavour to secure a contract between the Comores Government and Global Air.  He details in his two affidavits precise evidence of the role he is to undertake, and the fact that he is required by his employer to travel overseas on their behalf for such purpose, and to travel urgently.  This is supported by the annexures to those affidavits which are e-mails correspondence from the representative of the Comores Government and Mr Butler.  It is also supported by the evidence of Simone Butler as the sole director of Global Air.

8. Mr Butler's case is that he is required to leave Australia urgently, and that his flight leaves at 6.30 am on Sunday, 14 April 2002, and it is for this reason that he requested and was granted permission to list this matter for hearing urgently on a Saturday afternoon.  He is required to leave so urgently, he says, as the Comores Government lawyers will be available only for a short period this coming week to finalise negotiations, and due to the vagaries of travel in and out of the Comores, with the necessary connecting flights from Australia and other transit countries, he will be away from Australia from 14 April 2002 until 26 April 2002, a short specific period of 12 days. 

9. This is supported by an itinerary which is annexed to his affidavit, and further by the affidavit of Ms Westaway who is the travel agent arranging his travel. 

10. The trustee, Paul Pattison, as first respondent, opposes the application. The second respondent does not oppose the application. In essence, it would appear from the questions which were put in cross-examination of Mr Butler by the trustee at the hearing, that the trustee maintains that a ground under section 149D(1)(b) to (n) exist as a ground of objection to be taken by the trustee. This of course is relevant to the determination before the Court today because of the provisions of section 139ZU(3).

11. Secondly, it would appear that the trustee opposes the application on the basis that they do not believe that the benefits derived by Mr Butler in fact constitute income.  The first respondent did not file any affidavit setting out evidence-in-chief, nor seek the Court's leave to adduce oral evidence despite the fact that Mr Pattison was available by telephone link on that day as the trustee and could have given such evidence.  The first option, it was said, could not be exercised by the first respondents due to the lack of time given to them because of the urgency with which the matter was brought before the Court by the applicant and then heard. 

12. Notice was given to the first respondent of the applicant's intention to seek an urgent review of the Deputy Registrar's decision, it was conceded at approximately 7 pm on the evening of 12 April 2002.  The matter commenced for hearing after a short delay at 4.45 pm on

    
    

    13 April 2002.  I was satisfied that sufficient time really had been given for a short, albeit very limited, affidavit of oral evidence-in-chief to be prepared and faxed to the Court. 

13. However, taking into account the very limited time available to the trustee, the court offered a second option, as I have already set out, and that is that leave be sought for the court to allow the first respondent to adduce oral evidence at the hearing and by telephone.  The second option was not exercised, despite the fact that as the decision-maker

    
    

    I pointed out that I could not accept as evidence assertions made by the first respondent in submissions as they were not sworn evidence that

    
    

    I could take into account in making such a determination.

14. In my view, that is an important consideration because of the wording which is contained in section 139ZU3 ... the next few words, the important words being:

    “… has been established, whether or not such a notice has been filed or has been filed on that ground.”

15. Clearly where there is provision in the act that the court must not do something if it is satisfied that certain matters have been established, the onus falls upon the trustee to establish, by the only means available, in proceedings in this court, and that is by the adducing of appropriate evidence.  The court cannot, in my view, in any other way be satisfied, nor can the trustee establish anything as a fact, other than by way of evidence.  The trustee did, however, cross-examine the bankrupt who was available at the hearing for the purpose of cross-examination.

16. Given the nature of the questions asked and the blanket denials given by Mr Butler in respect of most of the assertions made by the trustee in cross-examination, I find clearly that those matters did not advance or assist the trustee in the exercise to which I have just referred.  I must apply, of course, the provisions of section 139ZU of the Bankruptcy Act 1966 (Cth).  The applications brought pursuant to those provisions and section 139ZU1 requires Mr Butler to have an order made by the court granting him permission to leave Australia before he is permitted to do so.

17. Absent of such consent from the court, Mr Butler leaving Australia would be an offence under the provisions of the Bankruptcy Act. Section 139ZU2 sets out strict matters for consideration by the court and the applicant, of course, must satisfy that these matters have been established in order for the court to grant permission. The wording of that section is that the court must not grant permission unless it is satisfied of one of two things. Mr Butler relies upon section 139ZU2(a) subparagraph 1, that it is necessary for him, the bankrupt, to leave Australia in order to continue to derive his income.

18. Section 139ZU3, as I have said, states the court must not grant permission if it is satisfied that any of the grounds of objection referred to in section 149D B to N inclusive, that may be set out in a notice of objection to the discharge of bankruptcy under section 139B has been established, whether or not such a notice has been filed or has been filed on that ground. I am satisfied, therefore, that the first step for the court to determine is whether or not it is necessary for Mr Butler to continue to derive his income to travel, as he seeks permission of the court to do so, to the Comores, in order to undertake negotiations on behalf of his employer, Global Air.

19. Given the uncontroverted evidence found in the two affidavits of Mr Butler, the annexures to those affidavits, as I have said being e-mails from the representative of the Comores government and various lawyers, and the uncontroverted evidence of Ms Simone Butler, the sole director of Global Air, I am satisfied that he is required by his employer as a consultant to the company to travel for the purpose stated and for the period stated.  I am satisfied that it is urgent that he leave Australia to undertake such negotiations with the Comores government on behalf of Global Air for the reasons as set out in his material.

20. There is an urgent need for this company to establish this contract with the Comores government and an urgent need for the Comores government to finalise any negotiations before the start of their tourist season which commences early May 2002.  I am satisfied that it is necessary for the purpose of Mr Butler deriving his income.  It is clear that the trustee has made an assessment based on his income, which includes fringe benefits received, or likely to be received, by Mr Butler from the company, Global Air Leasing Pty Ltd.

21. Those include the matters which I have already set out, and it is clear that they form and constitute income for the purpose of Australian Taxation Legislation, and also for the purpose of the trustee assessing, as he has done here, any contribution that the bankrupt must make to his bankrupt estate.  Clearly, to determine otherwise, in my view, would fly in the face of the definition of income which is usually ascribed, both in this jurisdiction and other jurisdictions, when determining that question. 

22. The next matter for determination is whether or not the purpose of the travel is genuine and I am satisfied that it is for the reasons I have already given.  I do not accept that it is likely that Mr Butler, in the circumstances where he has set out in great detail the reasons for his travel, the intention to return to Australia, the connections that he has as set out in his most recent affidavit, which I find are close and genuine connections with Australia, is likely to be a flight risk.  Mr Butler has stated his intention to return to Australia.  He has gone further and provided to the court a very detailed itinerary showing his return to Australia on 26 April 2002.

23. He has given evidence to the court, which is unchallenged, that he has parents who live in Australia and he lives with his parents, his father being ill and requiring his assistance, given that his father suffers from prostate cancer and is presently in remission.  He gives evidence on the relationship he has with his 12 year old son and the provisions which have been made for his continuing parental relationship with his son through orders made in the Family Court of Australia for regular contact which Mr Butler exercises with his son, Meika.

24. In those circumstances, there is no basis upon which the court could determine that Mr Butler is otherwise intending to act against his stated intention and that is to return to Australia on 26 April 2002.  Given the lack of evidence which is before the court in relation to whether or not there is a ground of objection referred to in section 149D1B to N, I am not satisfied that the trustee has made out a case that the court should not grant, and must not grant, permission, given that one of those grounds has been established.  As I have already referred and found, the onus rests with the trustee to satisfy the court that such a ground, or one of them, has been established and in this matter I am satisfied that that has not occurred.

25. Given those findings, clearly the applicant has satisfied the provisions of section 139ZU.  It is necessary for him to leave Australia in order to continue to derive his income.  I have been satisfied that the purpose of his travel is genuine and urgent.  I have been satisfied that he does not constitute a flight risk and is likely to return to Australia, given his stated intentions and connections with Australia.  I have been satisfied that the grounds of section 139ZU3 have not been made out by the trustee and, in those circumstances, I make the orders which were made by me upon an undertaking which was given by Mr Butler, that undertaking, of course, being for added protection to satisfy the court of his intention to return to Australia, and the orders that are made are those which were made by me on 13 April 2002.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Rimmer FM

Associate: 

Date: