Hepburn, N. W. v Dickens, C. K.

[1988] FCA 830

JUDGMENT No. ..sd 30 &&

i

IN THE FEDERAL COURT OF AUSTRALIA	1
I
GENERAL DIVISION	)
1

BANKRUPTCY	DISTRICT	THE	OF	)	No. W511 of 1988
1

STATE OF NEW SOUTH WALES	AND	1
1

THE AUSTRALIAN CAPITAL TERRITORY )

RE: NORMAN WINSTON HEPBURN

Applicant

CLYDE KENNETH DICKENS
Trustee f o r the Bankruut
Estate of Norman Winstbn

Hepburn

Flrst Respondent

DEPUTY COMMISSIONER OF

TAXATION

Second Respondent

CORAM: M. L. FOSTER, J.
DATE: 18 OCTOBER, 1988.

PLACE: SYDNEY.

REQISTRY

REASONS FOR JUDGMENT

(EXTEMPORE)

HIS HONOUR:	The appllcant, Norman Winston Hepburn, became a
bankrupt on his own petition on 2 9 March 1988.	The first

RECEIVED

1.

FEDERAL COURT OF

AUSTRAUA PRINCIPAL

respondent was appointed trustee of his estate by Order of the

Court on that day.	The applicant had been required to submit to
examination pursuant to S 6 9 of the Bankruptcy Act.	He retained

solicitors for the purpose of his representation at those

proceedings on 4 October, 1988. It appears from the Affidavit of

Francis William Gallbally, his Solicitor, that on 10 October
1988, the applicant provided instructions, together with some
accompanying documentation relevant to his representation at that
examination.

On 12 October, 1988 Mr Gallbally advised the applicant that he might have an entitlement to an allowance payable by the trustee from money collected on behalf of the Estate pursuant to S 135(l)(j) of the Act. An application was accordingly made to

the first respondent for such an allowance.	That application was
considered by the first respondent, who also	called a meeting of
the committee of inspection in relation to the application.	The
first respondent, pursuant to a resolution of that committee,

re~ected the application for the payment of any allowance towards

the costs and expences of the applicant's representation at his
S 69 examination.

Against that decision of the first respondent the

applicant brings this appllcation to the Court. In so doing he

relies upon S 178 of the Act. That sectlon reads as follows:

"If the bankrupt is affected by any 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 an equitable."

L .

The relevant decision, the review of which is sought

pursuant to S 178, is, of course, a decision	made pursuant to S
135(l)(j).	That section, so far as relevant provides:

"The trustee with the leave of the court may make
such allowance out of the estate as he thinks just

to the bankrupt."

The decision of Beaumont J. in Clyne v. Deputy

Commissioner of Taxation, 61 ALR 487, makes it clear that the

provision of funds sought from the trustee falls within	the
concept of an allowance in this section.

I do not consider that the existence of the words
"spouse" or "family of a bankrupt" in the section have any
limiting effect upon the nature or extent of the allowance that
can be made in the trustee's discretion with the leave of the

court.

It was put on behalf of the respondents that there was

a fundamental barrier to the maklng of an order of the court by

the court reviewing the trustee's exercise of discretion in this

matter.	It was put that S 178 when read in conjunction with
S 135 indicates in effect that no power of review can be

exercised under S 178 where all that has happened is that the

trustee has refused to make an allowance. It was submltted that

the case of Clyne v. Deputy Commlssioner of Taxation in effect authorised revlew by the court only in circumstances where the matter came before the court as a result of a trustee seeking the

court's leave to implement a decision to grant an allowance to a
bankrupt. In circumstances where that allowance had been

refused, so the submission ran, there was no relevant decision

upon which 8 178 could operate.	I consider that this is too
narrow a construction of S 178.	It has been held in Re Tindall
(1977) 30 FLR 6 that S 178 confers "the	widest possible
discretion as to the appropriate order in	an application pursuant
to the section".	I respectfully agree with this interpretation
of the section.

I do not think that it is permissible to read the wide

words of the section down in conluction with the wording of S 135
to produce a result that the Court cannot exercise jurisdiction
under 6 178 in circumstances where the act of the trustee
complained of is simply one of refusal to grant an allowance. I
am satisfled that if the Court considers in the exercise of its
discretlon that the trustee's discretion should be reviewed or
reversed then the Court can make an appropriate order to that
effect, and, in order to comply with the letter of S 135, at the
same time, grant leave for the making of the relevant allowance.

I am therefore satisfied that in this instance the Court has

power to entertain the application that has been made to review

the decision of the trustee.

It has been put on behalf of both respondents that if

the Court is of the view that it has jurisdiction to consider the
trustee's decision afresh that it should nevertheless in the

exercise of its discretion refrain from reversing or altering in

any way that decision.

The material before the Court is fairly sparse. The

Court does not have any precise indication that in the absence of some order being made the bankrupt will be denied representation

at the hearing. On the other hand the evidence indicates that

the second respondent, the Deputy Commissioner of Taxation, will

be represented at the proceedings by both senior and junior

counsel with an instructing solicitor.	The material is before
the Court to indicate that there has been a failure	on the part

of the applicant to lodge income tax returns over a number of
years. It is reasonable to assume that the applicant is
necessarily in some jeopardy In these proceedings in relation to

possible penalties that may be visited upon him in the future if

the facts so justify. Obviously consistently with his civil

rights posltion he would be lntitled to give careful
conslderation as to whether or not he should answer questions,

the answers to which may have some self incriminating capacity.

It 1s clear that the examination 1s to rove over a

number of years and that the activities of the applicant were

varied in that period and are obviously complex. The materlal
before me does not satisfy me that the applicant is incapable of
providing satisfactory legal representation for himself in these
proceedings. However, the fact that the flrst respondent will be
represented by no doubt experienced ~unior counsel and the second
respondent by senior and junior counsel indicates that there is
demonstrated some concrete need on the part of the applicant for
assistance in relation to his being represented.

The material before me does not justify me in coming to

a conclusion that he should have provided to him out of the funds

of the estate, as they are known, moneys sufficient for the

briefing of senior and junior counsel. As the matter progresses

it may perhaps become apparent that that type of representation is desirable and that the applicant is unable to provide it for himself. That is a decision that simply cannot be made now. I think by an appropriate order reserving liberty to all parties to

apply it is possible to make some provision for future

-

contingencies.

As I see the situation at present the Court, in the

interests of ~ustlce, should make some provision to ensure that

the applicant has available to him advice of competent junior
counsel as to the general conduct of the examination and also to
provide for his being represented on a daily basrs by an

experienced solicitor. Doing the best I can I have come to the

be granted to him by the trustee from the estate of $750 per day	conclusion that I should make an order that an allowance should
up to a maxlmurn of $ 4 0 0 0 to cover the type of asslstance to which
I have just made reference.

I reserve to all parties liberty to apply for the

purpose of either enlarging or restricting these amounts. Insofar as it is necessary so to do I make that allowance

pursuant to S 178 of the Act and pursuant to	S 135 I grant all
necessary leave.	I award costs to the applicant against both
respondents.

I certify that this and the 6 preceding pages

are a true copy of the reasons for judgment

herein of his Honour Mr. Justice Foster.

Dated: 21 November, 1988.

Associate:

A P P E A R A N C E S

Applicant:	S. G. Finch, Esq.
Instructed by Messrs. Galballys Parish Patience

First Respondent: B. J. Skinner, Esq.

(Trustee) Instructd by Messrs. Kemp Strang & Chippindall

Second Respondent:M. J. Slattery, Esq.

Instructed by the Australian Government

Solicitor

Hearing Date: 18 October, 1988

Date of Judgment: 18 October, 1988.