Clyne, Re P.L. O'Brien, Ex Parte J.W.

CATCHbIORDS

BANKRUPTCY - Public ex

:am

lmatlon of bankrLpt - Ob~ectlon

questlon regardlng overseas bank accounts

- nether questlon

1 s relevant to purpose of examination

- Relevance of

clrcumstance that answer

to question may cause someme to take

crlmlnal proceedings agalnst bankrupt

- Relevance of poor

health of bankrupt - Posslble effect of answer u2on pending

Applicatlon In respect of admlnlstratlon

of estate.

Bankruptcy Act 19€6

s . 6 3

Re Pacret C19277 2 Ch. 8 5 , Re Atherton C19127	2 KB 251,
Hardlnq (19811 57 FLR 320 applled.
P.929 of 1983

Re PETER LEOPOLD CLYXE;	ex parte JOHN WILLIAlY O'BRIEN
Wllcox J.
Sydney
5 February 1985

I N THE

F DERAL

COURT

OF AUSTRALIA

) )

GENERAL DIVISION

BANKRUPTCY DISTRICT OF THE	STATE	OF	)	N O .	p .929	of	19a3
)

NEbT SOUTH	WALES	AND	)
>

THE AUSTRALIAii

CAPITAL

TERRITORY

)

RE :

FETER

LEOPOLD

CLPNE

Bankrupt

EX PARTE:

JOHN NILLIAM 0 ' BP IEN

Trustee

CORAM :

NILCOX

J .

DATE:	5 FEBRUARY 1586
PLACE :	SYDNEY

MINUTE OF rJRDE?S

THE

COURT

FIMES

THAT:

The questim as to whether or nor; a telex Searlnq date

March 1983 was sent by the debtor, Peter Leopold

Cl:rne,

to which questlon an 05~ectlon

was made on behalf

of the

sald debtor and overruled by a Deputy Reglstrar cf the

Federal Court of Bustralla, is 3 proper questlon.

2 .

THE COURT DIRECTS THAT:

1.	The bankrupt,	Peter	Leopold	Clyne,	answer	the	sald
questlon.

The matter be referred back to the said Deputy

Registrar

for a ccntlnuatlon of the publlc esaminatlon of the

bankrupt under 5.69 of the Bankruptcy Act 1966.

NOTE :

Settlement and entry of orders is dealt wlth by

Sankruptcy Rule 1 2 4 .

IN THE FEDERAL COTJRT OF AUSTRALIA	)
)
GENERAL DIVISIOM	) )

BFSJKRUPTCY DISTRICT OF THE STATE OF )

No. F.929 of 1983

)

NE31 SOUTH

WALES

FND

) )

THE AUSTRALIAN CAPITAL TERRITORY

RE:

DETER LEOPClLD CL'INE

Bankrupt

EX PARTE:

.JOHN GiILLIAM 0

' BRIZPI

Trustee

COR-XY:

WILCOX

m:	5 FEBRUARY 1986

PLACE

: SYDNEY

EXTEMPORE RFASONS FOR JUDGMENT

There is currently proceedmy- before a Deputy

Registrar of thls Court the public examination under

s.69 of

the Bankruptcy Act 1966 of 'eter

Leopold Clyne. The publls

examlnatlon went for some days

clurlng 1985 and was then

adlourned.

A period sf six days, the first of whlch 1 s

to-day, vas allocated

by the Deputy Peglstrar for the

completion of the public examinatlon.

2 .

Eetween the date upon

whlch the public examination

was ad~ourned

last year and the present date the trustee ln

bankruptcy and his sollcitor

~ourneyed

to Austria and there

obtamed certain mformation In relation to bank accounts and

assets said to be owned by, or under the control of, the

bankrupt, Peter Leopold Clyne. Certaln assets were brought

back to Australla and Mr Clyne has filed

an Appllcatlon In

this Colurt in

which he claims that the assets

are not assets

of his estate and seeks approprlate rellef. That sppllcation

has been llsted before	the Chief Judge for directlons on	l4
April next.

During the period

of the ad~ournment

of the public

exanination an appllcatlon was made

to Beaumont J. In respect

of the provlslon of money to enable the bankrupt to be

represented by senior and

~unlor

counsel at the resumption

c~f

the publlc examinatlon. in the n e w taken by his Honour

was not necessary to provlde funds for senlor counsel to be

briefed on the

hearmg of the public examlnation but his

Honour dld make

an order to enable consultatlon by

]unl.or

counsel, for whose fees provision was made,

1171th senlor

counsel In regard to the publlc examlnatlon. In

con~unction

wlth that applicatlon counsel for the trustee was requestesd to

provlde to those representing the bankrupt

a list of the

toplcs about

whlch he would be questloned upon the

r sumption

of the public exammation.

The toplcs, whlcn were llsted In

letter from counsel for

the trustee dated 19 December 1985,

included the sub~ect

matter of the bankrupt’s assets overseas,

overseas bank accounts, overseas passbooks

-- and in

particular a passbook havlng the code name

“Slezak” -- and

matters relating to

an entity whlch -- I am Informed -- was

created under the

law of Liechtenstein, and was previously

known as Kobenzl Holdings Anstalt and is	now known as Warlock
Investments Anstalt.

In preparation for the resumptlon

of the publlc

examination to-day counsel for the trustee prepared

bundle

of documents which were identified as

1MF184. These documents

appear to be communicatlons between

a bank In Vlenna known as

the Creditanstalt BankverT1.n and

Mr Clyne. Senior counsel for

the trustee to-day referred

Clyne to thls bundle

documents and, in the first instance, took

hlm ts the various

indindual documents for tht purpose of havlng hlm confirm the

apparent nature of the Qartlcular documents. The thlrd

document In the blmdle appeared to be a telex sent by

Clyne.

The questlon whether or not that in fact was a telex

sent by the bankrupt was put and answered. Counsel then

showed Mr Clyne the fourth document, which also purported	o
be a telex but bearmg date 9 March 1983, and put the same

question. At that polnt counsel on behalf of

Mr Clyne

ob~ected

to the questlon. The Ceputy Registrar heard argument

upon the valldlty of the

ob~ection,

overruled It and required

Mr Clyne to answer the question. Mr Clyne through hls counsel

indlcated a deslre to have that matter resolved by a ~udge and

the Deputy Reglstrar rhereupon referred the matter to the

Court pursuant to s . 6 9 ( 5 )

of the Act.

A s I understand the

position from counsel, there are likely to be a considerable

number of questlons :::mllar to that to which oblectlon has

been taken. Counsel on behalf of Mr Clyne has Indicated that

his client ob~ects

to answermg any questions dealing with the

Viennese bank account, or accounts, or relating to Kobenzl Holdings Anstalt. In effect I am being asked to conslder

those subject matters and to give

a ruling which, hopefully,

will be of asslstance to the Deputy Registrar in deallng

w th

any objection whlch may be made to any llke questlon as	the
publlc exammation progresses.

On behalf of the bankrupt four separate matters have

been argued as going to the questlon

of whether or not the

ob~ectlon

ought to be upheld. I wlll deal wlth them

in an

order differing from that put by counsel because

It s?ems to

me that the logical flrs's question arlses out of the last

matter argued: whetner or not the questlon

1 s extraneous to

the purpose of che exammation.	Section 69(1) of the Act
provides :

" 6 9 ( 1)

The trustee of the estate of

bankrupt may, at any tlme, make

appllcation, in wrlting, to the Reglstrar for

the examination of the bankrupt, on oath,

to the conduct, trade dealings, propercy and

affairs of the bankrupt."

It is that examination

which is presently in progress.

It wlll be noted that the subject matter of the examlnation includes not only the questlon of what property

the bankrupt mlqht have, and which is obviously

a matter of

concern to the trustee pursuant to his duty to get in for

the benefit of the creditors whatever property

may be

avallable for dlstributlon amongst them, but also includes

the conduct of the bankrupt. The authorltles make It clear

that thls subject matter is

to be construed in a wlde sense

pursuant to the Court's obllgatlon to make

mqulry as to the

conduct of the bankrupt

for the purposes of reportlnq to and

protecting the publlc. See re Paqet C19277 2 Ch. 85.

that case it was pointed out that the adminlstratlon

of the

bankruptcy law 1s a function whlch extends beyond the mere

collecting of debts on behalf of

creditors, lmportant thouah

that matter 1 s .

In re Atherton C19121 2 KB 251, Phlllimore

J. pointed oct that the consideratlon of the conduct of th?

bankrupt 1s relevant In relatlon to any applicatlon for

discharge which he might

in the future make. This is sunply

a partlcular appllcation

of the prmclple that the court

concerned to protect the public.

The prlnclples underlylnq these cases were applled

to our Act by Lockhart

J. in re Hardlns

(1981) 57 FLR

3 2 0

and I apply them for the purpoze

of conslderinq whether

not the questlons relate

ts natters extraneous to the proper

subject matter

of a public examlnatlon.

6 .

As I understand the purpose

of the questlons, both

from what has been said in submisslons and from the letter

of counsel In which the toplcs were specifled, the trustee

has become aware

of speciflc matters relatlng to Austrian

bank accounts since the date	of the ad~ournment of the
public examination in 1985.	Counsel for the bankrupr;

indlcated that during the 1985 public

exammations there

were questions put to the bankrupt In relatlon to any overseas bank accounts he mlght have. I gacher from xhat

has been sald to me that

Mr Clyne at that time denied the

existence of any overseas bank accounts in which he had an

interest. Those questions necessarily had to

be put in a

falrly general way because the detalled informatlon

which

has since come to hand

was not then avallable. That

1niormatz.on has come to hand In the form of documents

whch

on thelr face

-- and I emphasize that the apparent posltlon

may turn out to be incorrect when further lnformatlon is to

hand -- indlcate an assoclatlon between

Mr Clgne and various

bank accounts, that

1 s an assoclation in which

he has some

control over the operations of the bank accounts. Under

such circumstances it seems to me that questlons relating to

those bank accounts are clearly wlthin the purview of

s .69 !1) .

It may be that those questlons will reveal the

exlstence of hitherto undisclosed property; it may be that

they will indicate matters relevant to ths conduct of the

bankrupt in relatlon to the operation of his financial

affalrs. The documents appear to be relatively recent and

1 .

it is the obligation of the trustee to find out what

1 s

position in relation to the various bank accounts which are

referred to therein.

I am of the view that the matters sought to

investlgated by the trustee fall squarely wlthln s . 6 9 ( 1 ) and that the objection on the ground that the questions are extraneous to a proper public examinatlon must be reJeCted.

The second matter

1s that it 1s said that answers

to the questions may expose the bankrupt

to criminal

proceedlngs and may tend to incriminate him.	Sectlon 0 9 ( 1 2 )
of the Act provides:

" 6 9 ( 1 2 )

The bankrupt shali answer all

questions that the Court, the Reqlstrar or the

maglstrate puts or allows to be put to him

and, unless the Court, the Reqlstrar or the

maglstrate, as the case

may be, otherwise

directs, is not excused from

answering any

such question by reason only

of the fact t3at

the answer to It may tend to incrlmlnate him."

Counsel for the bankrupt refers to the posslbility of

criminal prosecutlon as, for exampl?, far

some breach of the

Bankins (Foreicm Exchanqe) Reaulatlons,

f o r per~ury m

relatlon to evidence previously given. He adds that there

has been one previous prosecutlon of his client, apparently

at the lnstance of

an officer of the Alustrallan

Taxatlon

Offlce;

a prosecution whlch resulted in

a convlcE:1on of hls

cllent for a breach of the Bankins (F9reiq.n Exchanae!

Requlations. It

1s said that, If answers are glven which

indlcate that a crimlnal offence may have occurred, it 1s

likely, havlng regard to the relationship between the

bankrupt and the Deputy Commissloner

of Taxation, that a

further prosecutlon will be launched.

I think that it is clear that the policy of the

Act

as set out In s . 6 9 ( 1 2 )

is that questions are to be answered

notwithstanding that the answer may tend to lncrlmlnate the

bankrupt. It must follow that the fact that the answer may

cause some person, whether

a normal prosecution authorlty

some other person, to realize the possiblllty of

successful crlmlnal prosecution and to launch that

prosecution 1s not a reason for permlttlng

a bankrupt to

decllne to axwer.

In the normal course the glvlnq of

answer lndicating the conmission of

a crlmlnal offence must

give rise to the posslbllity, if not the espectatlon, that

somebody would commence a crimlnal prosecutlon.

if it

matters, there 1 s nothmg before the Court,

or, Indeed, m

the hlstory of the lltigatlon between the parties to cause

me to believe that any decision

to prosecute the bankrupt

for a crlmlnal offence would be made vexatlously	or wlthout
a proper foundatlon.

The third matter to which reference

has keen made

is the health of the bankrupt. In an

affidavit winch was

put before the Deputy Registrar, and whlch

was read over cne

ob~ection

1n certaln respects, I gather, of the trustee, lt

is sald by

Mr Clyne that he suffers from anglna 2ectorls and

9 .

is under medlcal care. For the purposes of thls application I accept that this 1 s so but I do not thlnk that the state

of health of the bankrupt furnishes

a reason for his

refusing to answer questions. No doubt i n the collduct of an examlnatlon a Court or a Reglstrar wlll have cognizance of

any health problem which

a bankrupt may suffer and will make

allowance for that problem in terms of sitting hours and the

necessity for medical treatment, etc.. But I do not thmk

that the fact that a person suffers ill health furnlshes a

reason why questions should not be requlred to be answered.

It may be thought that

a person who is stressed to the polnt

of detrment to health by

havmg to undergo a publlc

exammatlon would be best advantaged by glving

as much

lnformatlon as posslble and	so reducing the lecgth of the
exammation hearlng.

The final matter to which reference

1 s made

1 s the

pending Applicatlon of Mr Clyne ln respect of the assets

which were brought back by the trustee from Vienna. It is

said that answers furnished by

Mr Clyne, if he 1 s compelled

to answer the questions sought to be put

to h m , mlght

preludice his case in that Appllcatlon. I admit to some

difficulty in seelng the conslstency between that cialm and

the claim that the present questlons are Irrelevant and

extraneous to the 5.50 mqulry.

It spems to me implicit In

this final submlsslon that the questlons may, or

ace llkely

to, go to matters which are relevant

m determining the

10.

ownership of assets said to be

the property 0,‘ the bankrupt.

Be that as it may, the fact

that the bankrupt might flnd

himself embarrassed in other lltlgation is not

a reason for

decllning to answer questlons under

3.69 of ‘be Eankruptcy

A A .

It is not wlthout importance that sub-s.il2) opens

wlth the words:

“The bankrupt shall answer all questions

that the Court	... puts or allows to be put to
hlm ...I’

That is the overridmg principle.

If the answers to these

questlons tend to make

it more difficult for the bankrupt tu

succeed In other lltigation, and In particular litlgatlon

relatmg to the administration

of the bankruptcy, then that

is an went which is not considered by the statute to be

reason f o r excusmg answers. Indeed

it mlght be thought

that the adminiscratlon of

the bankruptcy, and the

resolution of other litigation in connection

wlth the

bankruptcy, would be facllltated rather than lmpeded

information being obtained	by the trustee at the puDlls
examinatlon stage.

The conclusion I have reached 1 s that the questlon

which was objected

t3 is a proper question. I dlrect that

the bankrupt answer the question whlch was put

to him before

the Deputy Registrar and

I refer the matter back to tne

Deputy Registrar for a contlnuation	of the publlc
esamlnation.

11.

I certify that the ten

(10)

preceding pages are

a true copy of the

Reasons for Judgment herein

his Honour Mr Justice Wilcox.

Associate:

A H

Date

25 February 1986

Counsel for the bankrupt: Mr

E C C

Lewls

Solicitors for the bankrupt: Messrs

M F Tremlow Si CO

Appearance for the petitioning

Mr S McMlllan (5oliclcor)

credltor

Sollcitors for the petitioning Australian Government Solicltor creditor:

Counsel

for

the

trustee:

H Hicholas QC

wlth Mr S M P Reeves

Solicitors for the trustee

Messrs Stephen Jacques Stone

(Mr John William O’Brlen):

Jame

Date(s) of hearlng:

5 February 1986

[1986] FCA 32

2 May 1986