Durie, Re V.W.

[1986] FCA 136

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NOT FOR GENERAL DISTRIBIITION r '

CATCHWORDS

Bankruptcy - Application for discharge - Principles governing exercise of discretion

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Bankruptcy Act 1966 (Cth), s.150

Re : VICTOR WILLIAM DURIE. A BANKRUPT

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Ex Parte: VICTOR WILLIAM DURIE	i
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No. W 639 of 1984
Neaves J.
22 April 1986
Sydney

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IN THE FEDERAL COURT OF AUSTRALIA	)
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I	GENERAL DIVISION	)
1 No. W 639 of 1984
BANKRUPTCY DISTRICT OF THE STATE OF	)
i	NEW SOUTH WALES AND THE AUSTRALIAN	)

TERRITORY CAPITAL )

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-	Re :	VICTOR WILLIAM DURIE	I
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A Bankrupt	I 1,'
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Ex parte: VICTOR WILLIAM DURIE

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CORAM: Neaves J.

m: 22 April 1986

REASONS FOR JUDGMENT

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This is an application by Victor William Durie ("the bankrupt") pursuant to s.150 of the Bankruptcy Act 1966 (Cth) ("the Act") for an order of discharge from bankruptcy.

On 9 July 1984, on the petition of Sterland Bros. Pty.

Limited, a sequestration order was made against the estates of

the bankrupt, Laurence Walter Dummett and Clifford William Glew

as joint debtors. Mr Maxwell William Prentice, a registered

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trustee, is the trustee of their estates.

It appears that in 1978 the bankrupt conducted a

plumbing business in partnership with Mr L.W. Dummett. In March

1980, a company, Durie and Dummett Plumbing Services Pty.

Limited, was incorporated and took over the business. In

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October 1980, the name of the company was changed to Spanish

and Colonial Homes Pty. Limited and the company commenced the business of a project home builder In the Gosford and Central

Coast areas of New South Wales. The bankrupt and Messrs

Dummett and Glew were the shareholders in, and the directors	i .
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of, the company. The bankrupt apparently had a 40% interest in

the company,	Mr Dummett and Mr Glew each having a	30% Interest
therein.

In November 1982 it became apparent to the directors

that the company was in financial difficulties. Attempts were

made to complete the work in progress and to refinance an

exhibition home to generate a cash flow to enable the company

to pay its creditors. However, on 10 October 1983 the company

was wound up voluntarily and Messrs M.M. Prentice and S.J.

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Parbery were appointed joint liquidators. The company will pay	5
no dividend to unsecured creditors.

Certain debts of the company were guaranteed by the

bankrupt and Messrs Dummett and Gl'ew. The failure of the

company led to claims being made against those individuals.

claims which they were unable to meet.	This	led directly to
the sequestration of their estates.

On the hearing of the application the bankrupt

appeared in person. He was not legally represented. There was

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before the Court a report in writing by the trustee of the

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estate but the trustee was not present and was not represented.

Mr M. Quilter appeared on behalf of Network Finance Limited, a

creditor, to oppose the granting of an order of discharge. The

grounds on which the application was opposed were -

“(a) That the bankrupt has made no attempt at

restitution.

(b) The bankrupt has not demonstrated any pressing need to be discharged from bankruptcy.

(c) It is inequitable and against public

policy that the bankrupt be discharged.”

The bankrupt did not adduce any evidence, oral or

documentary, in support of his application. He was, however,

sworn and answered questions put to	him by	Mr Quilter and the
Court.

The bankrupt’s statement of affairs sworn on 28 July

1984 disclosed assets of $340 (cash at bank $20, cash in hand

$20 and household furniture and effects $300) and liabilities

of $55,736. He also disclosed a debt due to him by Spanish and

Colonial Homes Pty. Limited of $68,917 but stated that the

amount likely to be received in respect thereof	was nil. There
was thus an estimated deficiency of $55,396.

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There is no information in the trustee’s report under C‘

l	sub-s.150(3) of the Act concerning the realizations (if any)
made in the bankrupt’s estate or as to any proofs of debt

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lodged or admitted in the estate. The trustee, however,

certified to the Reqistrar in Bankruptcy that there were six

creditors of the estate who were to be notified of the

application for an order of discharge. The amount claimed by

each of those creditors to be owing by the bankrupt is not

shown. The trustee has reported that no amounts have been

brought to the credit of the estate by way of contributions

made by the bankrupt.

The bankrupt is a married man, 36 years of age, with

his wife and four children aged between 2 and 10 years

dependent upon him. He attributed his bankruptcy to the

collapse of the company, Spanish and Colonial Homes Pty.

Limited. He said that he had worked mainly in the field, the

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administration of the company being largely in the hands	of
Messrs Dummett and Glew.

A summary of the affairs of the company dated 22

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September 1983 discloses that the company then had assets 'I ,

consisting of trade creditors only with a book value of $46,462

and liabilities of $346,909. The creditors of the company

!	subsequently determined that the further expense .required to
pursue the company's book debts was not warranted. It is I - '
obvious that no dividend will be paid to the company's
creditors.

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It is equally obvious that no dividend will be paid in

the estate of the bankrupt. The trustee has not reported any

of the matters mentioned in sub-s.150(6) of the Act. Nor is it

alleged that the bankrupt has committed any offence against the

Act.

The bankrupt gave evidence that, after becoming a

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bankrupt, he commenced to carry on business as a plumber on his

own account in the Central Coast area of New South Wales and

that that business is continuing. He said that the business is	. i
carried on under the name Durie Home Plumbing, a business name	L .i

registered by his wife. He said that when he commenced the : $.

business he approached a supplier of plumber's requisites for

credit explaining that he was an undischarged bankrupt. He

further said that he was allowed a credit rating of $500 and

that that remains the situation at present. I should add that

there is nothing before the Court to suggest that any offence

against s.269(b) of the Act has been committed.

In Re Maher (1985) 61 A.L.R. 592 Woodward J. at

pp.601-2 said:

"Although I have stated that I am of the opinion

that there is no presumption that a bankrupt should

be discharged by effluxion of time under s.149, it

does not follow that every applicant under s.150 is

entitled to a discharge simply by reason of the

fact that there is nothing to be said against the

granting of that order. The court still must be

persuaded to exercise its discretion in favour of	I' ,
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the granting of a discharge order. It is for the ! -:

applicants to persuade it. Whilst I agree with

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Toohey J. in Re Benda that an applicant need not show 'special circumstances' to succeed, he or she must, in my opinion, show some cogent ground or

grounds for the exercise of that discretion in his

or her favour. A mere dislike of being bankrupt -

a consciousness of the stigma of bankruptcy,

attaching to all bankrupts but felt more by some

than by others - cannot of itself be enough."

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The bankrupt advanced as a reason why the Court should

exercise its discretion in favour of granting him a discharge

from bankruptcy that, as a bankrupt, he is finding it difficult

to carry on business as a plumber with the restricted credit limit allowed to him and that this is having an adverse effect on his ability to provide for his family. He also said that he

is having difficulty in obtaining rental accommodation,

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although I did not understand this to be a difficulty

attributable directly	to his	bankruptcy. According to the	.C
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trustee's report the bankrupt's earnings	are of the order of	.,
$370 gross per week.

In the course of his submissions opposing the grant of

an order of discharge, Mr Quilter very properly referred me to

an unreported judgment of Beaumont J. given on 27 September

1985 granting an order of discharge from bankruptcy to Laurence

Walter Dummett but suspending the operation of that order until

8 July 1986. As has been previously mentioned, Mr Dummett had

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been	in	partnership	with	the	bankrupt	and	was	later	a	I <	_ .
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shareholder and director, with the bankrupt, of Spanish and

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Colonial Homes Pty. Limited (formerly Durie and Dummett I

Plumbing Services Pty. Limited). As has also been mentioned,

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he became bankrupt on 9 July 1984 at the same time as Mr Durie.

the cause of both bankruptcies being the failure of that

business consequent upon the economic recession in 1982.

There is a marked similarity between the facts of this

case and those in the case of Mr Dummett both as to the cause

of bankruptcy and as to the respective circumstances in which

the bankrupts now find themselves. After reviewing Mr

Dummett's circumstances, Beaumont J. concluded:

"On the whole, I am of the view that the

circumstances of the case do not warrant the grant

of an absolute discharge at this stage. On the

other hand, there are present here mitigating

factors, especially the absence of any suggestion of misconduct, which support the conclusion that

the statutory period of bankruptcy should be

reduced from three to two years. In short, I am of

the view that a proper balancing of the private and

public interests involved calls for the grant of a

discharge provided it were suspended so that the

duration of the bankruptcy would be two years."

Bearing in mind the general principles enunciated by

Woodward L( in the passage cited from Re Maher (supra), I

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regard the present application as a borderline case. There is, I -

however, a matter lying outside Mr Durie's particular

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circumstances to which, in my view, it is proper to have regard

and which supports the grant of an order of discharge in his

case. To make an order similar to the order made by Beaumont

J. in Re Dummett would have the merit of dealing consistently

with two bankrupts whose circumstances bear, as I have said, a

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marked similarity. In all the circumstances I think it is

appropriate to give some weight to that consideration and I am,

in consequence, persuaded to exercise the Court's discretion in

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Mr Durie's favour.

I, therefore, make an order of discharge from l

bankruptcy but suspend its operation until 8 July 1986.

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I certify that this and i'

the preceding 7 pages are

a true copy of the Reasons

for Judgment herein of the b:.

Honourable	.Mr	Justice	8 ,
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Dated: 22 April 1986	L
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IN THE FEDERAL COURT OF AUSTRALIA	1
GENERAL DIVISION	)
1 No. W 639 of 1984
BANKRUPTCY DISTRICT OF THE STATE OF	1
NEW SOUTH WALES AND THE AUSTRALIAN	)

TERRITORY CAPITAL )

&:	VICTOR	WILLIAM	DURIE
A Bankrupt

Ex parte: VICTOR WILLIAM DURIE

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MINUTE OF ORDER

JUDGE MAKING ORDER : Neaves J.

DATE OF ORDER	: 22 April 1986
WHERE MADE	: Sydney

THE COURT ORDERS THAT:

1.	The applicant, Victor William Durie,	be discharged
from bankruptcy.

2. The operation of the order of discharge be

suspended until 8 July 1986.

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m: Settlement and entry of orders is dealt with in rule 124

of the Bankruptcy Rules. ".