Dudley v White
[2007] FMCA 1071
•9 July 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DUDLEY v WHITE & ANOR | [2007] FMCA 1071 |
| BANKRUPTCY – Section 178 Bankruptcy Act 1966 – permission to travel overseas – whether Court should interfere with Trustee’s decision. |
| Bankruptcy Act 1966, s.178 |
| El-Maghraby v Pattison [2003] FMCA 103 |
| Applicant: | KEITH IRVINE DUDLEY |
| Respondents: | CLYDE PETER WHITE AND PHILIP NEWMAN |
| File number: | MLG886 of 2007 |
| Judgment of: | McInnis FM |
| Hearing date: | 2 July 2007 |
| Delivered at: | Melbourne |
| Delivered on: | 9 July 2007 |
REPRESENTATION
| Applicant: | In person |
| Counsel for the Respondents: | Mr R Broberg |
| Solicitors for the Respondents: | Irlicht & Broberg |
ORDERS
The Applicant be granted leave to file in Court this day the affidavit sworn by him on 9 July 2007.
The Application be dismissed.
The Applicant pay the Respondent’s costs to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG886 of 2007
| KEITH IRVINE DUDLEY |
Applicant
And
| CLYDE PETER WHITE AND PHILIP NEWMAN |
Respondents
REASONS FOR JUDGMENT
In these proceedings the Applicant seeks an order that pursuant to s.178 of the Bankruptcy Act 1966 (the Bankruptcy Act) effectively seeking permission to be allowed to depart Australia to live with his wife in the United Kingdom for the remainder of his bankruptcy.
Section 178 of the Bankruptcy Act relevantly provides as follows:-
“(1)If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
(2)…”
The Application was scheduled for hearing as an urgent application for reasons which will become apparent.
Although the Applicant who is self-represented simply seeks an order that he be allowed to travel to the United Kingdom, it is clear that the application pursuant to s.178 of the Bankruptcy Act arises from a decision of the Trustee in Bankruptcy set out in a letter dated 27 June 2007 where the Trustee advises the Applicant that the request to travel to the United Kingdom for the remainder of the bankruptcy is denied.
By way of background it is noted that the Applicant was declared bankrupt on a Debtor’s Petition on 25 July 2006. The Respondents were appointed as Trustees of the Bankrupt Estate and this appears to have been confirmed on 25 August 2006. There is no dispute that the most significant creditor of the Applicant was the Australian Taxation Office. According to the affidavit relied upon by the Applicant and sworn 29 June 2007 the amount due to the Australian Taxation Office was “$346,263.05” and the amount of the total debt was “$372,195.95”. In his affidavit the Applicant claims to be eligible for discharge from bankruptcy on 25 July 2009.
There is no dispute that the Applicant was the subject of a Departure Prohibition Order by the Australian Taxation Office which meant that the Applicant was unable to travel to the United Kingdom where his current wife and child reside. His wife has three children by a previous relationship.
The Departure Prohibition Order was revoked on 25 June 2007. The Applicant claims that by lifting the Departure Prohibition Order the Australian Taxation Office demonstrated that “they are not concerned with my living overseas …”
The Applicant notes in his affidavit sworn 29 June 2007 that he has been married for “1 year and 11 months” and asserts that “We have spent more time apart than together and the only regular contact I have with my wife is by telephone”. The significant issue currently before the Court apart from the Applicant wishing to be reunited with his wife and child is that his wife is now expecting a second child due in January 2008. In his affidavit the Applicant relevantly deposes,
“17.Although the intention of my wife and I was to have another baby when I returned to England, during my wife’s visit last March/April she conceived and in May, Nicky told me that she was pregnant again. I was both delighted and down hearted as we were to have an addition to our family yet she would have to go through the pregnancy and birth without me again.”
The issue of concern raised by the Applicant from the bar table and in his affidavit was an indication given by his wife that she intended to terminate the current pregnancy if the Applicant is unable to leave Australia.
Again, in his affidavit it is relevant to set out the following:-
“18.A day later Nicky told me that I couldn’t leave Australia to come home to her she intended having an abortion. Her reasons are mentioned in her letter to me dated 28th June 2007 I was shocked as I want to have more children.
19.My wife Nicky has confirmed by letter emailed to me on the 28th June 2007 that she has an appointment with her doctor for an abortion on the 2nd of July, 2007. This will be in Horley, Surrey, UK. Because this is in the UK, her appointment is in the evening of Monday the 2nd of July (Australian Eastern Standard Time), Annexure 4
20.Nicky has me advised previously on that phone that unless I can demonstrate to her that I can come home soon and support her during her pregnancy and the raising of our children, she intends having an abortion. The denial of my application to live with my wife in the UK by my bankruptcy trustees had had the effect that my wife intends going through with her abortion.”
It should be noted that from the affidavit evidence from the Applicant that he has been aware of his wife’s apparent intention to terminate the pregnancy since approximately late May 2007.
No objection was taken to the Applicant relying upon a print out of an email purportedly from his wife dated 28 June 2007 entitled, “Re: The safe return of my husband Keith Dudley” (Annexure 4). In that document the author refers to her current circumstances and difficulties. She refers to the fact that she had suffered two miscarriages, one during the course of her relationship with the Applicant and another during the course of her previous marriage.
In her email the Applicant’s wife relevantly states:-
“I have booked an afternoon appointment with my Doctor’s Surgery on Monday the 2nd July, where I shall talk through my thoughts on having an abortion with my midwife, if Keith’s application to return to England should be rejected. This process in itself is very stressful as you are required to be accessed by two independent doctors on different occasions to make sure the decision I make is not rash and thought through in the best interests for all concerned. Having to explain my personal situation over and over makes me even more sad and worthless as a mother. On this point, I would like to say that I have already from two missed-miscarriages, the first in 1997 at 18 weeks and the second in 2005 with Keith’s baby. A missed miscarriage is where the baby dies but is not aborted by the body, resorting in a hospital evacuation to remove the dead foetus. As you can image the discovery of being told your baby is dead during a routine scan is extremely painful to accept and deal with, which only makes the decision I have to face even more difficult and upsetting. I am also aware the further along my pregnancy gets the more complications are possible during the surgery and the harder the recovery will be. I only hope that I am not forced to make this appalling choice.”
In his request to be allowed to travel to the United Kingdom dated
26 June 2007 the Applicant confirms that it is his intention to travel on a one way flight and does not indicate an intention to return to Australia for the duration of the bankruptcy. He confirmed that intention in Court. He further states in his request the following:-
“My wife has advised me that she has an appointment to have an abortion on the 3rd of July. If I can demonstrate to her before she has the abortion that I can travel back to the UK, and be a support to her in the remainder of her pregnancy and a help in raising our children, I will be able to convince her to not have the abortion.’
The Respondents who as I have indicated are the Trustees replied to the Applicant’s request dated 26 June 2007 in the letter which is the subject of this application dated 27 June 2007 where the author relevantly states,
“I advise that your request to travel to the United Kingdom for the remainder of your bankruptcy is denied on the following basis:-
· I consider your request to travel overseas for the remainder of your bankruptcy is unreasonable as you are not likely to return to Australia. At present, you are eligible to be discharged from bankruptcy on 25 July 2009. Given that my investigations into your affairs are continuing, should you travel overseas and not return to Australia, this may hamper my investigations.
· The purpose of your travel is not to earn any income that would benefit the bankrupt estate’s creditors. Nevertheless should you travel overseas, I am not satisfied that you would comply with your obligations with regard to assessing your yearly income contributions and disclosing to me any property that you may acquire or which may devolve on you after the date of your bankruptcy.
· If you travel overseas there is no restriction on your travelling to other countries, which may make it difficult for me to monitor your movements and for you to comply with your ongoing obligations to me as an undischarged bankrupt.
· Your application is made on very short notice and you have provided no supporting evidence in relation to the position of your wife and family as described in your letter.”
Relevant law
The Court has previously set out what is regarded to be the relevant law when considering matters of this kind in the decision of
El-Maghraby v Pattison[2003] FMCA 103 where the Court states and I adopt the following:-
“11.It is appropriate to refer to s.178 of the Bankruptcy Act which provides:-
“If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.”
12.In re Tyndall ex parte Official Receiver (1977) 17 ALR 182 the Court said,
“An application by a bankrupt for permission to travel overseas requires careful consideration of all relevant circumstances for the reason that is ordinarily related to the freedom of a subject who is neither a criminal nor under criminal restraint to travel to pursue his legitimate commercial or personal desires”.
13.In Re Hicks: Ex parte Lamb (Heerey J 4 March 1994 VB 1473 of 1993) the Court said,
“I suggested to counsel for the trustee in argument that the following issues were, while not necessarily conclusive, nevertheless at the forefront of the matters to be considered in exercising my discretion:
Is the proposed visit genuine?
Is the bankrupt likely to return to Australia as promised?
Will the visit hamper the administration of the estate?”
14.In the matter of Casella v Prentice [2002] FMCA 48 I stated the following:
“I accept that the court should only interfere with the trustee's exercise of discretion if it is shown, as indicated by the applicant, that the impugned conduct of the trustee was incorrect or that other conduct was or would be preferable and that justice and equity require the court's intervention.””
Submissions
The Applicant relied upon the affidavit material to which reference has been made together with a more recent hand written affidavit sworn
2 July 2007 which again annexed a further email from the Applicant’s wife and relevantly a copy of an ultrasound report dated 7 June 2007 which appears to confirm that his wife his pregnant and at the date of that report the gestational age was “8 weeks plus 2 days”.
Also annexed to the most recent affidavit appears to be an email from a Detective Sergeant of Police confirming that during the course of police investigation and prosecution of firearms charges against the Applicant he had remained in contact with the Licensing Services Division of the Police Force. The reference to that document appears to relate to an earlier reference in the Applicant’s first affidavit to the fact that he had been charged with firearms offences and that he had co-operated with police and despite absences from Australia had ultimately returned to Australia where he was dealt with by the County Court on 20 April 2007 where no conviction was recorded with no fine upon the Applicant being placed upon a three year good behaviour bond. The Applicant sought to rely upon this information to indicate that he was able to comply with the requirements of the police investigation and accordingly would likewise be able to comply with any requests of the Trustee should he be overseas for the duration of the bankruptcy.
The Applicant otherwise submitted that the circumstances set out earlier in this judgment deposed to by the Applicant and set out in the email correspondence from his wife provided a proper basis upon which the Court should exercise its discretion to allow him to travel overseas and obtain the order sought pursuant to s.178 of the Bankruptcy Act.
The Respondents relied upon an affidavit sworn by Sean Steven Pulverman affirmed on 2 July 2007 and an affidavit of the Second Respondent, Clyde Peter White also sworn on 2 July 2007.
Mr White in his affidavit deposes that after appointment as Trustee of the Applicant’s Bankrupt Estate, investigations have been undertaken in relation to the Applicant’s affairs. He produced a Statement of Affairs and report to Creditors. Reference is made to the Statement of Affairs disclosing that the Applicant operated a business known as AFV Components. Accounts in the name of that business with the National Australia Bank it is claimed had a credit balance of approximately $64,000. That purportedly comprised three amounts deposited to that account by the Department of Defence on 24 July 2006, 26 July 2006 and again on 26 July 2006. The exact total of the three deposits is $64,187.000.
Mr White then relevantly deposes the following,
“8.The existence of these funds was not disclosed by the applicant either in his statement of affairs or subsequently to me. It was brought to my attention following telephone conversations between a representative of the Department of Defence and Mr Sean Pulverman, a manager in my office assisting me with this administration, on 22 and 29 May 2007. A subsequent call by Mr Pulverman to the National Australia Bank indicated the existence of the funds in the account of the applicant. I refer to the affidavit of Mr Pulverman which sets out further details of these conversations.”
It should be noted that the paragraph is not relied upon for the truth of its content but simply that an issue has been brought to the attention of Mr White which requires further investigation. The Applicant during the course of the hearing claimed that he had not been advised of this issue prior to the hearing date. No issue is taken in relation to that claim. However, Mr White then expresses concerns and raises other issues in relation to the administration of the estate as follows in his affidavit,
“10.The applicant will not be eligible for discharge from bankruptcy until 25 July 2009. I am still conducting investigations into the affairs of the applicant and there are a number of matters concerning the administration of the estate which are presently unresolved. I refer generally to exhibits ‘CPW2’ and ‘CPW3’ which constitute reports by me as trustee. In particular matters which are presently unresolved in regard to the administration and recoveries concerning the estate include:-
a)A possible void disposition in regard to the transfer of an interest in real estate to the applicant’s defacto wife Ms E Erdmann on 28 January 2002
b)A possible void preference in regard to a payment made to Simba Defence UK Ltd.
c)A possible void preference in regard to a payment to the applicant’s wife Nicola Dudley.
d)The matters set out above in relation to the $64,000.00 in the AFV Components bank account.
11.The administration of the bankrupt estate and in particular the matters referred to in paragraphs 7 to 10 above may require the applicant’s presence in Australia either for the purpose of providing me with information and assistance or to give evidence as a witness in any court proceedings I might institute for recovery in connection with those matters. For the reasons set out in my letter to the bankrupt of 27 June 2007 if the applicant were allowed to travel overseas for the remainder of his bankruptcy then I have no way of ensuring his co-operation with me or attendance in Australia should it be required.”
In the affidavit of Mr Pulverman further reference is made to the payment by the Department of Defence and reference is made to what might be described as a “double payment” of the amount of $64,000. It is not necessary to refer in further detail to that issue.
The Respondents submitted after referring to the relevant principles set out earlier in this judgment that in the present case the Applicant’s evidence could be criticised on the following grounds:-
·It is produced at a very late stage when he states that he has known of his wife’s situation in relation to pregnancy since May
·Is not supported by any medical evidence as to intention of his wife to have an abortion
·Is not evidence supported by the letter from his wife (Annexure 4) to the first affidavit of Mr Dudley which merely states that she has an appointment with her midwife to discuss the matter
It is submitted that the bankruptcy has another two years to run and significant matters are still under investigation including ‘void dispositions and preferences and the undisclosed amount of $64,000 in the bank account of AFV Components”.
It is argued that this may require the presence of the bankrupt in Australia for assistance and information and as a witness in any proceedings.
It was further submitted that the bankrupt had not made full disclosure of his assets and activities and has provided no confidence that he would be any more forthright or co-operative in the future. It should be noted during the course of proceedings that although concerns were expressed in the affidavit material relied upon by the Respondents, it is not suggested that the Applicant to date has not provided co-operation to the extent that he has refused or failed to attend relevant meetings or otherwise respond to requests for further information. Nevertheless it is argued that the current request for permission to travel overseas is not linked to any employment or benefit to the estate of the Applicant by means of generating remuneration. It was also noted that no surety is offered to ensure the return to Australia should it be required. In the present case the Applicant whilst indicating that he may be able to make available an appropriate surety has not been able to do so and it is clear that in this particular application there is no employer overseas or indeed present in Australia presently willing and able to provide any or any adequate surety.
In those circumstances the Respondents submitted that the application should be dismissed.
Reasoning
In my view applying the relevant principles of law to which reference has been made earlier I am not satisfied that it is appropriate for the Court to exercise its discretion pursuant to s.178 of the Bankruptcy Act. The decision of the Respondents to refuse the request of the Applicant to travel to the United Kingdom is reasonable. It is clear that the travel request does not involve any return trip to Australia nor does it involve any attempt to generate income which may then provide a benefit to the creditors of the estate.
Although reference was made to the Australian Taxation Office as the major creditor revoking the prohibition order that of itself does not persuade me that this Court should in the circumstances be influenced by that decision of the Australian Taxation Office. This Court is required to deal with the decision of the Trustee in the interests of all creditors and the current position requires the Trustee to retain the passport of the Applicant who may of course seek to make a further application on some future date providing amongst other things appropriate surety.
However, in the present case in the absence of a surety and given that the planned travel is for a one way trip to the United Kingdom I am satisfied the proposed travel would hamper the administration of the estate which is clearly in the early stages of investigation. There may well be other matters which require further investigation and the attendance of the bankrupt in Australia. Once the Applicant has left Australia then I am satisfied that significant difficulties may well be encountered by the Trustee in the proper administration of the estate in the interests of all creditors. Where there is no defined itinerary with a specific return date and in the absence of any surety or indeed evidence that the trip will generate an income of a kind which may assist in the administration of the estate, in my view it is not appropriate to make the orders sought by the Applicant.
Whilst I accept that the Applicant has a genuine concern for the welfare of his wife and child and to that extent that the proposed visit is genuine, that does not of itself having regard to the authorities provide a proper basis upon which the Court should interfere with the Trustee’s exercise of discretion. I do not regard justice and equity requiring the Court’s intervention in these circumstances and note on the evidence before me that the Applicant’s wife has managed to travel to Australia on at least two occasions in the last twelve months and presumably will be able to do so again in the near future. On the material before me whilst I note a reference to the prospect of termination of pregnancy I do not regard that as an imminent prospect and in any event that of itself is a matter for the Applicant to resolve by discussion with his wife and family based upon medical advice. I do not regard it as a sufficient basis upon which the Court should otherwise ignore the relevant factors that this Court must take into account when exercising its discretion in an application of this type.
At present it would appear that if the Applicant continues to co-operate with the Trustee that the Applicant will be automatically discharged from bankruptcy on 26 July 2009. Of course it may well be that that date is brought forward as a result of further conduct by the Applicant. It may also be the case that the Applicant may upon the production of further material including a surety seek to make a further request to the Trustee for permission to travel. The decision in relation to any further request will of course be a matter for the Trustee subject potentially to review by this Court.
However, on the information currently before this Court I am not satisfied on the authorities to which I have referred that it is appropriate for this Court to interfere with the discretion of the Trustee. Accordingly the application will be dismissed.
Addendum
Upon publication of my reasons in this application the Applicant has sought to rely upon a further affidavit sworn 9 July 2007. That affidavit annexes to it further email correspondence from the Applicant's wife. It also seeks to refer to a determination of pregnancy referral form.
It will be apparent from my published reasons that even if the court were to accept the truth, as it does for present purposes of that additional material, it would not, in the circumstances, alter the outcome of this court's decision. Whilst I acknowledge the most recent affidavit, for which leave has been granted for the Applicant to rely, it does at least advance the position somewhat further and provides greater clarity than otherwise was the case when the court heard the matter previously. It does not, in my view, provide a sufficient basis upon which the court should interfere with the exercise of the Trustee's discretion or to otherwise permit the application to succeed for the reasons advanced in my published reasons.
In my view, whilst in the recent material there is clearly a foreshadowed appointment by way of referral to another medical practitioner, that of itself does not, in the circumstances, provide a proper basis upon which the court would interfere with the trustee's discretion.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 9 July 2007
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