Furness, Re L.A.

Bankruptcy Act 1966, S. 149

Ean!xuo;cv Amendment Act 1980. 5 . 7 2

JUDGE MAKING ORDER :

Neaves 2 .

DATE OF ORDER	: 10 January 1986
WHEP.E MADE	: Canberca

M I N ' J T E

ORDER

. .

> , -' 1 THE COURT ORDERS

THAT the app1:cation by

the Official Trustee in

, I

I.- -

. . I -Bankruptcy

for a direction pursuant

to sub-S.

(12) of 5.149 of the

- ' . '

Bankrurtcv Act 1966 (Cth) that Leslie Angus

Furness, a bankrupt,

, . -

be not discharged

from bankruptcy by virtue of that section be

. I

. y > .

, . . .

. . ..

, I

I - , - ' ~ dismissed.

. _

. I

I ,. , .

' NOTE:	The settlement and entry of orders is dealt with in rule
124 of the Bankruptcy Rules.

B: Neaves J.

l0 January

1986

REASONS FOR JUSGMENT

This is

application by the Official Trustee in

Bankruptcy, the trustee of the estate

of Leslie Anyu? Furness, a

bankrupt, for a direction pursyant to sub-s.(12) of 5.149 of the

~ . .' --

1 9 6 6

(Cth) ("the Act")

that the bankrupt be not

Bankruptcy Act

, I .

'	discharged from bankruptcy by virtue of that section.

a-,.

. . . . the

.A'-sequestratlon

rder was

made

against

the

estate

bankrupt on 8 August 1974 . The bankrupt

was

publicly

, .

' ,

examined on'l8 February 1975, 28 April 1975 and 10 and 11 July

-, . '1975.

On. 9 January 1979 the Official Receiver for the Bankruptcy

District of the

State of New South Wales and the Australian

Capital Territory, who was then the trustee

the estate.

entered an objection, in the prescribed

manner, to the discharge

L '	'
On the hearinq of the application the trustee was

represented by counsel. The bankrupt appeared In person and made

submisslons to the Court but did not adduce any evidence. There

is evidence before the Court that the creditors of the estate

were notified of the date

of hearina of tEe application. There

was, however, no appearance on behalf of any creditor.

I n his

statement

affairs the bankrupt disclosed

assets of $785 and credltors with debts totalling $266,100.

addition to the fissets

disclosed the bankrupt claimed to be the

owner of certain poker machines

to the value of $20,000 whlch

were, he said,

the

subject of litigation. The trustee

has

3 .

The sum of $832.51 has been brouqht t o the c?-eTllt of the estate ,account. Thicty-three proofs of debt have beep lxl?ed aqain5r: the estat? for. amounts cotallin? 5170,552.37. The claim-

lodged Include clalms by

a number of creditors who were not

dlsclosed by the bankrupt in his statement of affairs. those

clalms totalllnq $39,945.09.

Ten clams have been admitted to rank for divldend as

follows -

9 claims to rank for divldend

as ordmary unsecured creditors

$70,765.00

1 claim to rank

as a preference claim

pursuant to s.221P

of the Income

Tax Assessment Act

1936

8,752.00

$79,517.00

I	The remainder of the claims have not been dealt with. presumably

. because no dividend has been pald to

creditors and there is no

likelihood of any dividend being paid in

the future. The funds

\ .

87 .I

. . .

1 .*-!. L

" I

'at present heid in the estate

are not sufficient to

pay fees and

the costs of

administration.

The petitioning creditor's costs

have been taxed and allowed

at $1,383 but have not been paid.

Contributions by the bankrupt to his estate total $125, the last

payment having been received

by the trustee on 30 September 1974.

The trl,Ajt

+ . e ' z

r?pc r t

relatlon

t a

the

p r e s e n t

application, pr?pated

Kr G. L. Caddy,

Assistant

Offlclai

Receiver, and hted 74 Januar-J

1962. contams the follmang

informatlon concernln? the bankrupt'	s	activities prlor to the
date of his bankruptcy -

" T n e

barkrupt had beer. engaged

on hls own account.

partnership

In association with

varlous

compar.ies, in the design ami furnishing of registered

clubs and motels.

He stated that durlng the 10

years

,.._

before

the

date

bankruptcy, he designed

excess of

, .

l00 clubs

and

motels

and that he received fees ranging

' . . 'from

between

$5,000.00 and $10,000.00 for each design.

..; .. -17. Investigations

reveal

that

bankrupt

was

- associated

with the following companies:-

, I 2,	r >,	~
*.

, , .

. .

. . ' ;,Project Interiors Pty. Ltd.

. . ' I

L.K.H. Pty. Ltd.

. ,

Assoclated Marlners Club Ltd.

Club Development

& Finance Corporation Pty. Ltd.

. I	Brookvale Woodworkers Pty. Ltd.

, ' . I.

. , -*I

+ :';CDF Management Consultants Pty. Ltd.

I-

Club Facilities (Aust.) Pty.

Ltd.

. ' - ' Nirellan Golf & Country Club Pty. Ltd.

South Redfern Parkizg Properties

Pty. Ltd

. ,	:, Club Development Pty. Limlted
' . - Furness Holdings Pty. Limlted
-_,...

The bankrupt

was a director or shareholder

the

companies and guaranteed company debts. It appears

that he managed the affairs

of the companies which have

now ceased

operation

or have been

placed

into

liquidatlon.

%In tine

course of the Inter-cornpay transactions a5

one company

failed,

its assets were transferzed to

another compary.

The

books and records and financial

statements of the companies did not ieflect

the

trce

financial posltlon,

some

lnscances.

and

manufa-cturing carried out in one company's plant was

undertaken

2nd

financed

one

or more of che

bankrupt's associated companles.

. L I n general,

it appears that the businesses and

companies in which the bankrupt

was

involved

were

commenced without sufficient

working capltal and that

operations were

financed from borrowed funds and

goods purchased

on credit. Delays in completing work

were experienced when it became difficult to purchase

goods and

raw

materials. Payment

f o r completed work

was needed to finance further

operations and delays in

completion increased the financial difflcultles already

affecting the

business."

, .

' .	Q. ' And one of the great problems, of course. in

the administratlon

the estate In your

. .

I '

office has been the intermlngling

of company

- . and personal f lnancial dealings?

' A.	That 1 s correct, yes.

, -

, , I

And it is virtually impossible to tell from

the

very

complicated

sitbstion

which

developed with the companies just where th?

assets had virtually qone?

A .

That is rlght. yes."

In October 1973 a

p r o p e r t y sltuate at Edlnlsurgh

Road,

Castlecraq, whlch was owned ]oincly by the bankrupt and. h11

then

wife, Emily Vlola

Furness, was sold.

f o r $ 6 8 . 0 0 0 .

The

bankrupt

and his wife received the sum

of $33,370

on settlcment of the

sale after the discharge of mortgages

on the property and the

payment of rates, expenses of sale and legal costs. Paragraph 25

, . , %

- . .	.	I	I,	of	Mr	Caddy's	report	states	-
I	, , I >
, .

" - ~'

_ .

' . .

2eveal that $2,500.00 of

the

. ,

"%Investigations

proceeds from the sale of the property at 239

I ..

1 - .

Edinburgh Road, Cautlecrag, was paid to the Bank

- . . :

..;a

of New South Wales for credit of the account

, - . ,

Furness

Holdings

Pty

Limited, a company

. _.

. . .

r ,

-I

essence, owned and controlled

by the bankrupt's

ex-wife and daughter. On 26th October

1973,

. . I .1 d;'.. .

,. ,',' :

deposit of $30,870.00

was received to the credit

of the account of

Furness Holdings

Pty Llmlted

. , . . v , ' ^

. -.

made up of two cheques, one drawn

o the Australia

. .

. I -

and New Zealand Banking

Group, Castlereaqh Street,

. .

Sydney for $26,090.00 and another drawn on the

I .

Commercial

Banking

Company

of Sydney

Llmited,

Young Street, Sydney for $4,780.00.

The

bankrupt

. .

cannot advise whether

the amount paid to Furness

Holdlngs Pty Limited was paid in payment of a debt

owed by him and his ex-wife.

believes the

payment

may

inter-company

relate

disbursements.

R .

It appears that the 5ettlrment

of the saie took place

@n '74

October 1973, some few days after service on the bankrupt of

bankruptcy notlce Issued

,on behalf of the Bank

of New South

Wales. Notwlthstanding the -ervice

of that notice. subsLantlally

the

whole of the

net

proceeds

Lhe

sale. inciudlr.;

the

bankrdpt's share

chereln, were used tu

pzy debts af compar.ies

owned and controlled by

Lis wife. Emily Vlola Furness.

Tine bankrupt pleaded guilty befGce the Eistrict Court

of New South Wales In Its r3rimlnal Jurisdiction Ion 70 Iicventber 1981 to an offence against sub-s.265(7) of the Act, in that, wlthln twelve months before the presentatfon of the peLitlon on

which 'ne became a bankrupt, he removed part of his property, to

wit $16,685 being his share in the proceeds from the sale of the

above mentioned property.

,.. .

Mr Caddy gave evidence in

those

proceedlngs.

. "I..'

'cross-examinatlon

by counsel 'for the bankrupt, Mr Caddy was

,.: , , .asked:	, ' ,. .
- . '	< r

.. .

I, , I.'

I .

' ,

-,' v . ,

. I I

"Anyway! so

far as your office could find

out,

.*'. . , I,, ,,

P , - '

both at the public investigation

and during your

, - . . ' :

own

investigation, are you reasonably

satisfied

' - .	that the proceeds	of	the sale of	that	house	went
, I

to paying off debts

of the various companies

..,

I .

what appeared to

be an attempt

to stave off the

collapse of this whole organisatlon?"

L .

' Mr Caddy replied:

"Yes, I am reasonably satisfied that would be the

situation".

The other offences, whlch r+late to the

hankrupt’s

conduct smce the

date of hls

bankruptcy, may be summarised. as

follows, the date of	the commission of each Gffence being shown
In brackets -

(a)

an offence against

s u b - s . 2 6 5 1 4 )

of the Act of

,concealing, after

the

presentatlon

the

petition on which he became a bankrupt, a debt due to him, to wit a debt of $15,000 due from Narellan Golf and Country Lodge Pty.

Limited (13 August 1974);

(b)

an offence against sub-s.265(1) of the Act of

omitting a rnaterlal particular

from

statement relating to his affairs, namely the

debt of $15,000 referred to above (13 August

1974)

;

10.

(e)

nlne offences agamst 5.269 of the Act of

obtaining credit to che extent

$200

more from a

person wlthout inforrting that

person that he was an undlscharqed bankrupt,

,. - '

- :

' particulars of whlch are as follows -

'_ ~;

~( i) $1,500

from John Ivor Coby (June

. ,

. - <

1 9 7 6 ) ;

(ii) $958.50

from

Kieran

0 ' Sinannes sy

(June-September

1 9 7 6 ) ;

'(iii) $604.30 from Warren

Georqe Osborne

(August-October

1 9 7 8 ) ;

.	(iv) $371.53 from Concord Golf Club Llmited

. ..

,,	(December 1 9 7 8 ) ;

'	(v) $487 from Richard Boyd Bofinqer and

James

Maglll

trading

as "J &

Carpets"

( Janua ry

1 9 7 9 ) ;

( f )

an offence

against

5 . 2 6 9 of

the

Act

carrylng on bus1nes3 undrf t n r firm name

"Barmakers of

Australia" without informtng

. every person with whom he dealt that he was	.,
b.

- .:an undischarged

bankrupt

(September

1978-February 1979);

,. -

A .

(g) an offence against s.29B of

the Crimes Act

1914 (Cth) of imposing upon the Australian

Telecommunications

Commlssion.

a publlc

'authority of the Commonwealth, by means

a n

untrue

r presentation

contained

in an

appllcation and agreement

for a telephone

. service that hls name was Angus O'Hearn,

'representation whlch

he knew

to be untrue.

with a view to obtalning a benefit, namely a

telephone service (October 1979).

1 2 .

"Your bankrupt-;- has

been a substantial one and

there

has

been a substantial amomt of

other

people'

5 money inv3lved in these rariaus offences.

It is not only the nature of the offences, the

frequency 1 s aiso so zpFallxnq. You have lust been dolng your own thlng regardless of your effect on the prep.-rty of other people. I regard this as an example of w h t e collar crime which simply demar,ds custodial punlshment."

In connectlon

with

the

three

offences

of leaving

, .

. , X

;

.,\,..'., .. -

.+ . ..:::;.Aps.tralia without the permlsslon In writing

of the trustee, it

.I .

,. ,

- , 1

I" .

. -

, ,.>.. .

may be

not'ed ' that in the course of the bankrupt's public

' I :

. '-':Q. You originally came from

New Zealand?

L.- A.

.Yes.

> - I .

- I . L ,-- L

. _

> .

'(+:Q. .Do you intend to

to New Zealand in the near

. .

2 , . ,

.', future?

- ,

1 -	, ' A. Not at all.

3 .-

'	Q. Have you a passport?

k. ., , . ~ A .

No.

I have been through this with Mr Batten

(of the Official Receiver's Office) and I have

told him quite clearly and deflnitely that

here to co-operate

with the Court and

I would

not be trying to leave.

I bring your attention to the necessity to

obtain permlssion before

you leave.

He has made it clear tc me."

It appears that the

Ijan%.upt was ngt qair.:ully employed

from September 19?4 to July l973. ~ Y , ~ I I ! i97E. C O 1977 he was apparently employed as Clerk of Bills in the P2rlian:ent of Kew South Wales. About the same time he was involved in the buiiness

ventures of Forest Hill Jolnery Works

and Barmakers of Austral~a

, - of which brief mention wlll be,\made	hereafter. Subsequently,	in
.. ,

1979, he was employed by the Government of

Fili and in 1980

. I

I the Printing and Allied Trades Employers Federation

of Australia.

. I

. , , , , m

In October

1974,

shortly

after

the

makinq

the

sequestration order, the bankrupt opened

an account wlth

the

Commonwealth Trading Bank at

St. Ives. Between

2 1 October

1974

\, and 2 1 May 1975 the deposits to that account totalled

$14,611.48.

Some of the moneys deposlted represented the receipt

soclal

service

benefits.

The other deposits were explalned

the

bankrupt as being loans

t o hlm by Furness Holdings Pty. Limited,

14.

Narellar. Golf and Country LGdqe Pty. Llmlted anl?. his wlfe. Jeanette Elizabzth Furness. Part of the moneys deposited to that

account were witt'drawn

frcm .3n acccunt with the Commonwealth

Savmqs. Esnk in the

jo;nt 11.sme5 of the k&:-krupt and Jeanette

Eilzabeth Furness. IPLO the latzer accQunt were mdeposlted moneys (totalling $ 8 . 4 0 0 ) s a l e :>y t h e bankrXlpt to be loans to hlm from

Furness Holdings Pty.

Llnitd and from 5outk Redfern

Fccklng

Properties Pty. Limited and	xhich he then loaned to Jeanette
Elizabeth Furness.

It appears from Mr Caddy's report thac the bankrupt

managed a business trading

as "Forest Xi11 Joinery Works", the

business name having been registered in the name of his

present

wife, Jeanette Elizabeth

Furness, on 0 December 1975. The report

, .

I , .

% ?

..I

.. . ,,_,further,states

that no books of account or details concerning the

.. .

. .:, -:

S.:

<'- .:,.

I .

L .

;,I

..,.>X.>.,

, .

% -

. .< ,

I operation of that business

have been produced to the trustee and

. _ -

I . I

. , I	-
. .

" ,< L.::l:'details

of the profits or losses made by the business

are not

. ., .

+. %.+

, _I* ,. , .'. ,-

I , . - , .

...

,	I +'...,A.

, '.

:-!'-:jknown.

_ -

. . I . \

. .

";A'

e;.

, ~-

I .

.A...

' >

;

:. \.':,

L,.*

< -

,<.,

.I ,

Reference is also made in the report

to a business

I a > ,.

. .

" I

. _

r:t , .

,#-carried

I. ..

on unde'f 'the.

name "Barmakers of

Australia" though no

~ .

.I:

. ;-:~

. .

.? . '

L '

,--.,details

of that business are given. In evidence before the

,-. .:,

1 . 1 1 '

-1 . i.'

. "

.: ,-District

Court,of New

South Wales in the criminal proceedings to

, _

I . ,

', ,.

which I have referred Detective Senior Constable Ronald Clive

. -

_.	,\,.L.. -i . . .	.	.	.'.	,
,, , ._ .

Cramp said:

"Enquiries were later

ca ried

out

with

accountants,

solicitors

number

and

businessmen in the southern area

Queensland,

along with the Companies Offlce in Brisbane, and

15.

it was revealed that the prlsoner

was the

sole

proprietor of a buslness known as 'Barmakers	of
Australia' x h c h was operating from premlses	at

Surfers Paradise.

nunber

statements yere

obtained and. it was fct1r.d thac st no tlme d l d

t h e

prljoner disclose to

any person with whom he

t h e

said

business

dsalt that he was

undlscharqed

bankrupt.

At the time that

buslness

ceased

operations

It had accumulated

debts

3pproximately $ 2 , 0 0 0 wlth a iurther

$3,000 in

unpald

waqes

due

to its

Queer.slan2

representative. Mr -4. Mlnkle .

Subsequectly

the

accumulated debts were satlsfled

by a

sale of

stock on hand

and

M r Mlnhe's wages

remain

unpald.

appears

from

Mr Caddy's

report

that

the

business

name

"Barmakers of Australia" was registered In the name of

the

bankrupt'

S present wife,

Jeanette Elizab5th Furness became

a bankcupt on 25

October 1978.

In her statement of affairs she disclosed

eighty

unsecured

credltors

for

amounts

totalling

$136,313.96.

. Forty-four unsecured creditors

have lodged claims against her

estate fdr amounts totalling $136,180. According to

Mr Caddy, it

. .

. %

appears that the majority of the claims relate

to debts incurred

in the businesses trading as Forest Hill Joinery Works and

Barmakers of Australia.

. _

' :

<..

I ,

. .

S I . 5

. I. . < . -	::..,",; '
I I

. .''

:':-,,-.In July 1977 and June 1978 the bankrupt was convicted

. - .

, .

I L > I '

. I .

offences'against sub-s.l17(1) of the Companies Act 1961 (N.S.W.)

. 1

. I

in that; 'as an undischarged bankrupt, he had acted as a

director

. of a company or had directly or indirectly taken part

in or been

concerned in the management of a company.

The bankrupt has attrlsX.:teci the cause of hls

ba?kruptc:j

to his inablllty to pay perscmal guarantees of the debts of

varlou5 clubs and companles

~ k c h

h e was called upcjn to meet when

the companies and buslnejjes falled.

The t~1~3tre

attrlr;.cLes

t h e

cause of

bankruptcy to the

h n k t x p ~ ' ; poor nanage:?ent

h i 5

affairs and

of the businesses

i n whsh he was

inao1ve.l.

The

trustee has also repcrtec: that a full i::vestlqatlon

the

bankrupt's trade

dealnqs and affairs has not been possible

because of the lack

records

of the

bankrupt's

business

transactlons and that the lack of

recorcl,s has

harr.pere3.

the

admlnistratlon of the estate.

The general principles to

be applied

i n considering

whether a direction under

sub-s.14?(12) should be given a r e not

in doubt: see Re Palenkas;

E s parte Ravmor (Brisbane) Pty. Ltd.

, .L..

, I..

' ( 1 9 8 2 ) 66 F.L.R.

115

and The Official Trustee v. Tennvson Turner

I . I . I

, ,." (St. John J. - 31 October 1533 - unreported). In the

former,

. . ,-

I ,

' '

- L

Fitzgerald J. said a t pp.116-7:

. -.

I . .

I ,

. .

. . . .

"The policy underlying

the

present

legislation

, I

recognizes

that

isn

the

interests

ofhe

plxblic as well as

the person unable to pay his

.. .

debts, that he should not be unduly denled freedom.

. - t '

' - , .

equality of status and opportunlty, or the ability

. > -

. . .

*I I :.

I '

and inducement to support himself and

hls

family

. .. , I . ,.:

. .~..

.- ,

and

contribute

society

his efforts.

,,. ... L

Accordingly, the Act

is in large part relevantly

. . concerned

with

obtaining

and

admlnisterinq

the

assets of the person unable to pay

his debts

f o r

. the benefit of

his creditors an6 releasing the

debtor from his obligations.

.- I .

However, the

legislature has thought it appropriate that there

should be a period durlng which the status and

consequences of bankruptcy

continue. It is

not

. .

presently

necessary

inve tigate

the

considerations

underlying

that

decision.

sufficient

note

that

standard

period

” .

I ,

I. -

, .

_I- .

, - 1 I, . .

(i) that the dlscharge of the bankrupt by

. .

_.I> ‘

_ ,

virtue of 5.149 of the Act would

.. .. ..

a .-

. .

~	prejudice the administration of his

(ii)

that the bankr,Jpt

has failed ts

co-operate ln tk.p admlnlstratlon of

hls estate. and

(iii)

that the bankrupt's zcnduct

b o t h

before

and after the ?ate of the banl.:rlAptc:r

has been dlshonest and	otherwls?
unsatlsfaccory.

The trustee also relies

on the evidence placed before the Court

relating to the circumstances In which the debts

of Lile bankrupt

were

incurred,

including

the

bankrupt's

experience

m , and

understanding of, financlsl

matters

and

of the

obligations

imposed on the bankrupt as a result

of incurring the debts.

A s to the first

of those matters,

Mr Caddy gave evidence

':.

on the hearing of the application.

His evidence included the

I	.
following:

"Q. What

steps have been

taken

way

-administering this estate since	1975 when the
' public examination was held?

A . , , There is a

lot happened since then. There

.;was a full investigatlon

regarding

the

1 ,. ..

'<'offences.

I n 1 9 7 8 Mr Furness went overseas

cand obtained employment in Fiji and

was

'c;

I .

,,&Sent from Australia for a period and

it was

- '	during this time that attempts were made to

."try and locate assets and everything else

indicated. Consequently, or on his return to

, ,.'

.Australia - - -

Q.	When you say as indicated where does one find

' that?

A. When I X:;

indicsted.

qen ral

adminlscr?.tlJn of the estate

was proceeded

wlth r ~ ~ h z

dorjr. tine ilne. Attempts zere made

to 03calc re:grc!s

an2 to

locate

assets

generilly. The	g'neral	akc;n1stratlon	~ c t s t
went or:.

Can you ,TL-,'?

?,e some .-?e?.

n f ~lnat

zere the

s o r t of

-l.-.

L L ; - L 1 3 ~

F -

trUZtee

ill? II? order

admlnlste-

i i . lc

>-~t'te

f r n o ~

: ??S?

None of It

seems t,? be

refe:-rei

tc In 7our r epor t

really, as c 3 JUSC w h t has >?en don?. khat

I am concern?,?. a5out 1 s the Officlal Trustee

1 s suqqestlng that I shculd make an order

whlch would

prevent

the

gperatlon of the

automatic dlscharye provlslons and one of the

grcucds. as I understan? It. is suqgested

that

allow

the autxiatlc

discharge

prov1sior.s '10 operatc- would xlverselg affect

the adminlstratlon of

the estate but what I

want to k n ~ w i s in

what respecLs will that

adv?rse pozition arise ha;.ixy

In mind what

has been done in the ten

years ,

eleven years

that Mr Furpess has been Sankrupt?

A .

Well, during

the

p rlod

the

official

receiver's flle - a number

of letters have

been written to creditors ascertainmg what

..	went on. A full investigation has beer.

z . , .

. I.

police

and

the

handled

baslc informatlon

. .

. ..

, * :..

, I

.';was obtained

the

official

receiver

and

' ? L I -

given to them.

The offences that have been

' , I

referred to were undertaken and flnalised.

the prosecution of those. At this stage

'.,

7 . : ;

-... " ,

. .

-._

,must admit that'nothing very much

is going on

,,.>,+,.>.. :. "

' in the estate of

MY Furness. It

is an old

1 - + - - , I

,'I

I . "

I . _

"-matter and virtually I must concede that as

_ ,

I I-

far

realisation

of assets

and

the

location

of any assets and invesclgation into that the

affairs have been virtually completed."

. I

. In re-examination Mr Caddy quite fairly said that

he did not

7 .

.think the discharge

. .

of the bankrupt from bankruptcy would

have

much effect.>'apart from maklng it

a 1ir;tle more difficult to

) . I -

. -

- - -

obtain the co-operation

of the bankrupt if, for example, records

concerning his trade dealings or affalrs "ever did turn up".

2 0 .

In relation to the other matters

I have read and re-read

the transcrlpt of the bankrupt's

y b l i c examinatlon.

As a result

I can well appreclate

the dlfflculties wlth whlch the trustee has

been faced In endeavourrng to

o b t a i n a clear understanding

of the

bankrupt's trsde dealmgs anmi affalrs ln the p a r s precedlng his bankruptcy. Such explanations a5 the banfmlp: gave of hls business ventures were unsatisfactory to say the l e a s t . He was vague and evasive in his answers and. although he persisted in

asserting that he had rnaintalned adequate recor-ds of hls

transactions, no satlsfactory

records

were

very

produced.

Further, no clear

distinction

can

drawn

between

the

transactlons entered

m t o on his

own behalf and those entered

into

behalf of

the

companles

whose

affairs

he managed.

Company and personal financial dealings

were inLermingled. Funcls

., ...

. ._

. B .

, . _ I

. ,: I ,

' I-

.. ";

were transferred between companies and,

in the absence of any

,. ,

. '

- .

' , ,

' I'

: l : ,.

I..

, ;%

;

; -."."adequate explanations for such transfers, one can only conclude

I . , , .

, .'I , ,

' .

' I .*.=:-,:that'they were

d signed to forestall action by varlous credltors.

, ,

>r-y --. . , ', 1 'L,

. ::;:.:;:;, -Ir '

. .

- :,".,;:+,".;.

.*!.::-Nor

can 'the

financial difficulties

of the bankrupt be attributed

, -

I .S?,\*

:,.v, ;' .

.,. ,

.,..I

- 3 -.-'to'

inexperience in business. The manner in which the bankrupt's

., r,, ,;<' %...

.I,

5 -

- share of the

net proceeds

oi the sale of the property at

_.	' Castlecrag were disbursed is also indicative of	a	complete
"	. , L

I .;-';disregard for the interests

of his personal creditors.

~ , . . , _ .

. I _

. - .

' > .

The bankrupt's conduct during the

five or six years

I _ -<

.I .

. .

+ .

. . ..

- .

' ' "*.after'the 'date of his bankruptcy demonstrates a departure from

. .

.	I	>
'	acceptable standards and, indeed, a lack of commercial morality.

'	I need not repeat all	that has already been said concerning his
.- .	..

. L

' ,

. . .I.

' L .

conduct in that period. It may be recalled.

however, that

made no real effort to contrlbute to his estate for the

benefit

of his

creditors, nocwithstandlng that he appears to have

had

access to substantial funds.

and

he committed serious

offences

aqamst thz Eazkrurjtcv Act

l966, (Ct'n) and the Crlmzs F.CL 1914

(Cth) fcr whlsh he

was convicted and sentenced t o irnprisonnent.

He was also convicted of offences aqainst the Companies Act

1951

(N.S.W.).

The bankrupt's conduct in obtaining credit on numerous

occaslons durlng the years

1976 to 1980 without discloslng that

he was an undlscharged bankrupt was particularly serlous.

I have confined the above comments to the period of five

or six years after the date

of his bankruptcy as

there is no

evidence before the Court concerning the bankrupt's activities in

L	.
l
. I

,- ...

"' :respect of any subsequent period. The bankrupt has not seen flt

. c-; >. , ,;

y;- . .

.. ,

- , .:r

3 I <

...

, -

;

"-to give any evidence in that regard and the best that can be said

I . \

. I

, > ; ,

I 1,.211 : ,,,'in

his'favour is that no

information adverse to him has come to

d., ,

, L. 1

\I . , . ,..

I . ,

,:F--> :

. ..

. -..,*,'');''the ,trusiee's notice in respect of that period.

He has, however,

, .;i:--:r>

. ,

,' ;-. -:,,;<- I ,

. I

: ''.<:'in

-that period made

no contribution for the benefit

of his

;..,,I,.,.

. _

- ' ,,- -,':-.all

the

matters

prescribed

rule

51A.

Against he

:.L.=' ,..

I .

;

I :. ,

, ,

. ~

. . a

---:

.',.

' '.,,.'considerations set out

above are to be weighed the fact that the

' L . - -

.V<.. .' >. I ! .

,--- bankr'upt is in his seventieth year and

has been a bankrupt for a

', very	long	time,	over	eleven	years.	In	the	course	of his
I. I.

: -'submissions to the Court the bankrupt said:

. - .

2 2 .

"I am n o t 1nter.zsti-d ~n commercial ernplr5s o r

commerclallsm myself nca.

My act;vltIes these 1Lay5 are related to becomlnq	a
successful aplarlsc - probably ralslnq whzt one

would call

stud

sto8:v

s m p l e term

f c r

che

bee-keeper.

I am lnteresktc In palrclng, bessuse I

always nave been. I do nor: fe?l my lr.ter?:tj	$7111
affect the publli -1er:J much az all.
....

The alternative situatio:;,

our

x c n ; u r ,

some'.hmg

llke

this:

70 y e % r s of

age

approximately, I

hopefully can work for another

five years. We have not a house. we pay renk;

have some furniture.

I have a deslre that when

leave my

wlfe wlli be

cared for

beczuse she has

been

particularly

loyal

t n

all matters,

particularly

those

when

I was committed to

Silverwater.

If I am not discharged, then

I auk myself how

long

will

before

on?

might

rightfully, or

loqlcally

thlnk,

that

one

mlght

ever

get

dlscharge. Your Honour.

so long as one has

health

and str-ngth to work one would hope that one mlght

put together some assets, but the

manmum time that

I	I would consider that I would have, considerlng my

, I	family's histories and my own, is probably five

I ~

-.year

In the

circumstances,

therefore,

your

I .

+ ,:Honour,

that whilst my learned friend has reviewed

my inadequacies and my

mlstakes, and not quite

, .

-. '.: correctly,

but

obviously

the

best

his

. L

, S - ' 'ability, I

fail to

',see

c7hat further objections

. ;-'- .?'

'could be' raised

to my-discharge when I am no longer

. .

' . (interested in the commercial

field,

but in doing

those thlnqs in which I may now flnd some solace,

not only for myself but for

my wife."

..\-, :::r:. '. ' .

, ,

1 ,

.	I , 5 : - , -,.
.	.	I

> , c

, . . I n 'considering the weight

I should. give to those statements

I am

. : P:*: -

I .

1 :	../ I a., .'

conscious'that the bankrupt chose not to qive evidence on oath

- , .>

,- -

. ~ ' ~ .

, .,

.L. L

e:ither.as to his past conduct or as to

his future intentions.

, .. L._ ...

.- .

. I

~;<	.-.	;'	*
1	.	.

" , .

- 1

.	., ... , - - ~	. . ^	. .	.	-	The	proposition that the bankrupt should not be
' r %

- _

discharged by operation of law but should be required to apply

_ ,

for a discharge under

s.150 of the Act

and satisfy the Court that

The Official Trustee

I n Bankruptcy has acted properly 13

bringlng the appilcation and in putting before the

Cowt matLers

relevant to the question whether the Court should inrervene to

prevent the bankrupt's discharge by operatlon of law. However.

in all the clrcumstances I propose to ma!ce no order as tcr the

costs of the application.

I	certify that this and

the preceding 22 pages are a true copy of the Reasons

f o r Judglnent herein of the

Honourable Yr Justlce

[1986] FCA 4

1 Oct 1986