| This is an application under section | 178 of the Bankruptcy Act | 1966 (the |
| Act) by a bankrupt of two days, seeking the return | or | release of her |
| passport which is and has at relevant times been | in the possession of |
| order to fulfil his functions. |
the Official Receiver. The Official Receiver was at first inclined to
accede to the application. However, before being able to give effect to
that preliminary intention, information came to his notice suggesting,
as it happens correctly, that the bankrupt had not been frank and fully
forthcoming in providing her statement of affairs and other information
which the Official Receiver was entitled to and undoubtedly needed in
The information not supplied to the Official Receiver was a full statement of the debts which the bankrupt has incurred. Her statement of affairs indicated that she owed almost $41,000 together with an
| indebtedness under a hire purchase agreement in respect of | a | Mercedes |
| motor vehicle of some $ 2 2 , 0 0 0 . She declared that her property | was worth |
| a little over $ 2 0 . 0 0 0 but it appears that the vast | majority | of that is |
| her clothing and immediate personal effects. | The consequence | was | that |
there was a substantial deficiency in the estate of this bankrupt on her
own statement, but the deficiency now appears to be grossly understated
| for a large number of other debts have | now come to attention. There now |
seems to be little doubt that at least $70,000 is in fact owing in one
form or another.
The bankrupt's application is simple. She says that she has an air ticket to fly to San Francisco by United Airlines in two days' time,that is on 2 April, wrongly described in her affidavit as 2 March.. She says that the air ticket has been paid for by a gentleman who is the vice president of an American computer spare parts company which operates in
| San Francisco where he | has lived for many years. Ms. Champion is flying |
| to San Francisco | to marry this man and it is expected that | upon | her |
| arrival in San | Francisco on 2 April, the announcement of their impending |
| marriage will be made | public. The ticket was, she says, paid for by her |
| fiance in the United States and paid in American dollars and | sent | to |
| Australia. This ticket has been seen by the Official Receiver's | office, |
| which does not challenge the | bankrupt's | assertions in this regard. |
| It is not the immediate intention of | the bankrupt. therefore, to return |
to Australia in the near future or at all, but she has supplied the address of her future husband's home where she expects to live in San Francisco and says that she is willing to return for whatever purpose is required under the Act should that become necessary. This would presumably be at her fiance's expense. The bankrupt says that when she leaves Australia she will eave with four suitcases of clothes and a dog and will be leaving behind her other assets apart from her jewellery
| which she will | presumably be carrying with her. |
| The bankrupt explains that the defects in her | statement of affairs were |
| due to the | fact it was completed on the | same day | on which the |
| sequestration order | was made, that she was extremely upset, that she |
| went straight to the Official | Receiver's office from the | court, and that |
| in those circumstances | she did not spend sufficient time or devote |
| sufficient care to the completion of the documents required of | her. On |
| the other hand, it has emerged from the proceedings that she | has always |
| been frank about her intention | or wish to leave Australia after | the |
| bankruptcy. | both | in her dealings with the Official Receiver's | office |
| which | commenced | considerably | before | the | sequestration | order | was |
pronounced, and with the Court registry.
| At the time the sequestration order was | made, the bankrupt was not |
| represented and I am willing to accept that the pressure of the court |
| proceedings, the fact that she was alone | and | the | fact that the |
proceedings would undoubtedly have been strange, confusing and distressing would be reasons why she might not have been as complete in
| the information | supplied as the Act requires of her and of every |
| bankrupt. |
There would seem to be little reason for, or little to be gained by, her not declaring that her bankruptcy was larger and her excess of
liabilities over assets was greater than she declared in the actual statement provided. Indeed, the fact that there has come to light subsequently, not least through the intervention of the petitioning creditor and the information which he has supplied, additional debts without any additional assets, tends to indicate that the chances of any of these creditors receiving any money at all in this matter is to all
| intents and purposes nil. That situation has become more apparent, | not |
| less apparent, since the disclosure of the additional debts. |
The bankrupt has given evidence today in support of her application and has been cross-examined. She discloses that the majority, if not all, of her debts other than the petitioning creditor's debt and the first
| mortgage on the house in Bellevue Bill | which she owned in 1984 and | 1985, |
| were undertaken or contracted when she was married to a man named Don Sekula (a marriage which took place in May 1985 in Australia), in relation to the abortive attempts of Mr Sekula to set up either here in Australia or in the United States a futures or some form of investment consultancy business. There seems little doubt on the evidence before me that the lifestyle followed by the bankrupt during her relatively short marriage to Mr Sekula was considerably more flamboyant than their | financial situation | at the time would otherwise have indicated was |
remotely possible. In fact, like a distressing number of other people
in the community at the moment, it appears that the bankrupt and her
then husband lived their lives on other people's and not their own,
| money, against the | possibility, albeit in this particular | case an |
| apparently hopeless possibility, that some business would | emerge | from |
the clouds over some country or other that would enable these, or some of these, debts to be paid.In the event, of course, nothing did emerge. The marriage broke up; the former husband has disappeared; the debts
| have grown and | Ms. Champion has been left to enter into bankruptcy as a |
| result. |
| So far as I have been able | to become aware in the | short time available - |
| and the matter is being heard | u gently on the eve of Easter, in order to |
| enable the bankrupt to know her position before the | court adjourns for |
| the holiday | period- this appears | to be | quite unique. I have been |
| referred to two cases in which similar applications have been made. Re | - |
| Tyndall (1976-1978) 30 FLR 6 was a decision of Deane J then | sitting in |
the Federal Court. In this particular case, his Bonour approached the issue of whether a passport should be made available on the basis that it was not a question as to whether the Official Receiver has acted
| unreasonably, absurdly or in bad faith in reaching the decision | not to |
| release the | passport, but whether the | court in the broad discretion |
| provided for in section 178, regards it as a proper case | for the refusal |
| or grant of leave to travel | overseas. |
| The second case was Weiss v The Official Trustee | in Bankruptcy (1984) 1 |
FCR 40 , a decision of the Chief Justice of this Court. Sir Nigel Bowen
accepted, without expressly finding, that the reasoning of Deane J in
| Tyndall was appropriate. Bowever, both of these cases dealt with |
applications by bankrupts to leave for overseas for temporary purposes, both of them in relation to some business activities in which the
| bankrupt wished or hoped to engage. This is the | first case in which the |
| application has been made | by someone who wishes to leave Australia |
indefinitely and do so for entirely personal or domestic purposes.
| It is also very unusual, even unique, that the application | is being |
| made, so very shortly after the sequestration order | has been pronounced, |
in circumstances which would obviously severely restrict the Official
Receiver's office in being able even to know what questions to ask the
| bankrupt, still less to be able to support the questions with | the |
| results of external inquiries made in the normal course. |
| For those reasons this case appears | to | be only approachable on general |
| principles. Deane | J in Tyndall at | 10-11 said that such | a matter was very |
| "Even though applications | for such leave are not | uncomn, |
| they must always | be treated as being | of fundamental |
importance requiring careful consideration of all relevant
| circumstances for | the reason that they are ordinarily |
| related to the freedom of a subject, who is neither | a |
| criminal nor under criminal restraint, | to travel to pursue |
his legitimate comnercial or personal desires."
| question therefore is whether this is | a case in which all the relevant |
circumstances or a balance of relevant circumstances point to the grant
| rather than the refusal of permission. It | is obviously unthinkable that |
| the court could preside over | a situation in which | a person was held in |
substance under nationwide house arrest, unless there is some reason why
| that restriction | of | movement should be imposed. It is | a fundamental |
| right of a person in a democratic country to leave and re-enter his | or |
| her country | at will, although that problem is today somewhat complicated |
| by the requirement | of the Government of the country that substantial |
| sums | of money be paid by way of taxes not only to leave but to come |
| back. |
| On the assumption that Miss Champion can raise the | S25 departure tax and |
| the $5 immigration fee, she | will leave on Saturday if her application is |
| successful today. | I can completely understand the decision | of the |
Official Receiver to change his mind in relation to the release of the
passport, having in mind the shortness of time that he has had to
| examine the estate and to question the bankrupt. This is especially | so |
| having | in | mind the defects that have appeared | in the statement of |
| affairs and the offence | or offences under the Act that have thereby been |
| disclosed. |
| In Weiss, Sir Nigel Bowen also had to deal with | a | case where various |
offences against the Act relating to non-disclosure and concealment.,had
been revealed in the public examination of the bankrupt in that case.
| However, his Honour went on at | 43: |
| “It is a basic principle that | a resident of Australia is |
entitled to expect that he m y travel freely notwithstanding
| the fact that he is a bankrupt provided | it will not lead | to |
| his staying overseas in order | to defeat or delay | his |
| creditors and provided | it will not interfere | with the due |
| administration of | his bankrupt estate.“ |
I am persuaded that Miss Champion does not intend her trip overseas to
| be for the purpose of delaying or defeating her creditors. | I am also |
| persuaded that her departure | will not materially interfere with the due |
administration of her bankrupt estate. It would appear to be the case
| that at least some of her debts are either jointly | or partly owed also |
| by | her | former | husband. | Although | the | information | concerning | his |
whereabouts is extremely sketchy, it does appear that he is still in Australia. Those creditors who will clearly not receive anything from the estate of Miss Champion might well be advised to look to Mr Sekula
for the possibilities in that direction. It may be that if Mr Sekula is
| found, the Official Receiver will wish to subject him | to | a public |
examination in which event it is likely that the assistance of Miss
Champion will be required to brief and instruct the Official Receiver in
some of the material that he would wish to ask. That information might
well be obtainable by letter, telephone, facsimile transmission, telex
or others of the wonders of this modern technological age. It might also
| require that Miss Champion be here | in which case she has undertaken on |
| oath to return to Australia whenever required and has, as | I have said, |
| left the address where she can be contacted | in the United States. |
The question is whether those undertakings can be accepted and whether
| they mean anything. It is very difficult | in a case such as this to make |
| a | final determination. As in any event there is only a | limited time |
| provided by the Act for a refusal of the release | of the passport, and |
because it appears that both Miss Champion and other people have been
| trying to find her former husband without success for some considerable |
| time, | I | cannot see how the refusal of the passport will make | it more |
| likely that | Mr Sekula will be found in the short term rather than | in the |
longer term when she would be entitled to have her passport as of right.
I am also satisfied that little will be gained by her remaining here in
terms of any information she can supply which might suggest that she
For all those reasons it seems to me that it is just and equitable that
| her passport be released. | I say that not completely without doubt but | I |
feel that in the circumstances she has done her best now to be frank
with the Court and with the Official Receiver about the position, albeit
| somewhat tardy and in | a less satisfactory way than was desirable. |
| I order therefore that her passport be returned | so as to enable her to |
| depart as planned | on 2 April. I also order that within seven days of her |
arrival in the United States, Miss Champion is to transmit to the
Official Receiver by the fastest available method the full name and
| address of her proposed husband's home and office, his position | in the |
company, the facsimile and telex numbers of the business, the telephone
| numbers of his home and his place of business, and | statement of the |
name under which he has his principal bank account together with the
| name of the bank and its address. This | I order not at all for the |
purpose of suggesting that any of his assets have anything to do with
| this bankruptcy but merely as | an | indication of good faith in the |
| circumstances. I further order that the Official Receiver supply | a copy |
| of the transcript | of today's proceedings to the bankrupt in | the United |
| States as soon as it becomes available. |