Hunter, Kenneth Raymond v The Offical Reciever in Bankruptcy of the Southern District of the State of Queensland - [1980] FCA 171

Re: KENNETH RAYMOND HUNTER; JOHN ROBERT HUNTER; and GEOFFREY GRAHAM HUNTER
And: THE OFFICIAL RECEIVER IN BANKRUPTCY OF THE SOUTHERN DISTRICT OF THE STATE
OF QUEENSLAND (1980) 50 FLR 168
Nos. G7-9 of 1980
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.(1), Franki(1) and Brennan(1) JJ.

CATCHWORDS

Bankruptcy - Discharge by the Court - Whether power to order immediate discharge subject to conditions - Official Receiver as respondent to appeal to Full Court - Liability for costs.

Bankruptcy Act 1966, s.150.

Bankruptcy - Application for discharge - Powers of court - Whether court can order immediate discharge subject to conditions - Express or implied power - Bankruptcy Act 1966 (Cth), ss. 37, 150 (5), (6), (7). Bankruptcy - Application - Official receiver as respondent - Appearance of official receiver in exercise of his discretion - Respondent unsuccessful - Liability for costs.

HEADNOTE

Each of the appellants had been declared bankrupt in similar circumstances. They had been called upon to honour certain directors' guarantees entered into by them in respect of a number of companies which had subsequently failed. The dividend paid to unsecured creditors in each estate was only one or two cents in the dollar. No conduct within s. 150 (6) of the Bankruptcy Act 1966 was alleged. On application for discharge by each bankrupt, the official receiver, the trustee in each case, attended and made submissions inviting the court to grant orders of discharge subject to conditions. The judge at first instance acceded to the submission of the official receiver and made orders of discharge subject to conditions designed to prohibit each bankrupt from engaging in business as a partner, director or substantial shareholder in a company without the leave of the court for a period of two years.

On appeal,

Held: (1) Statutory authority is necessary to empower the court to make an order subject to conditions.

Ex parte Powell (1901), 1 SR (NSW) 150; Re Huggins; Ex parte Huggins (1889), 22 QBD 277; Re Atwill (A Bankrupt), (1958) NZLR 873, referred to.
(2) Where no conduct falling within s. 150 (6) of the Bankruptcy Act 1966 is alleged or established, the power of the court to make an order of discharge is derived from sub-s. (7) of s. 150 only. Under this subsection the court is empowered to either grant or refuse to grant an unconditional order of discharge.

Re Mallan (1975), 25 FLR 20; Mallan v. Official Receiver (1975), 50 ALJR 1, distinguished.

Re Reilly; Ex parte The Debtor (1979), 36 FLR 268, disapproved.
(3) The specific limited statutory authority conferred on the court by s. 150 (7) cannot be circumvented by resorting to the provisions of s. 37 of the Bankruptcy Act 1966.

Re Reilly; Ex parte The Debtor (1979), 36 FLR 268, disapproved.
(4) Where the official receiver becomes an active litigant in the exercise of his discretion rather than in the performance of his statutory duty he is exposed to the same risks as any…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Hunter, Kenneth Raymond & Ors v. The Offical Reciever in Bankruptcy of the Southern District of the State of Queensland [1980] FCA 171 ((1980) 50 FLR 168)
Case: [1980] FCA 171
Decision Date: 26 NOVEMBER 1980

CaseChat Overview and Summary

In the matter of Hunter, Kenneth Raymond versus The Official Receiver in Bankruptcy of the Southern District of the State of Queensland, the Full Court of the Supreme Court of Queensland was tasked with resolving a dispute surrounding the bankruptcy of the appellant, Kenneth Raymond Hunter. The primary issues at hand involved the court's authority to grant an immediate discharge from bankruptcy subject to certain conditions and the Official Receiver's status as the respondent in an appeal to the Full Court, along with the implications for costs liability. The appellant sought to challenge the Supreme Court's orders which had been made in April and May 1980.

The court was required to determine whether it possessed the power to order an immediate discharge from bankruptcy with conditions attached and to what extent the Official Receiver, as a party to the appeal, was liable for costs. Additionally, the court had to examine the proper interpretation of the relevant legislative provisions concerning bankruptcy discharges and the procedural correctness of the orders in question. The court needed to ascertain if the Supreme Court had jurisdiction to impose conditions on the discharge and if such conditions were permissible under the applicable statutes.

The Full Court found in favour of the appellant, holding that the Supreme Court did not have the authority to order an immediate discharge from bankruptcy subject to conditions. The court concluded that the statutory framework did not permit the imposition of conditions on a discharge and that the orders in question were, therefore, invalid. Consequently, the court allowed the appeals, varied the orders of the Supreme Court to deem the public examination of the bankrupt concluded on specific dates, and deleted the conditions and the provision granting liberty to apply. The Full Court also ruled that the Official Receiver, as the respondent in the appeals, was liable for the appellant's costs.

The final orders of the Full Court mandated the variation of the Supreme Court's orders to reflect the conclusion of the public examination on the specified dates and the removal of the invalid conditions. Additionally, the Official Receiver was directed to pay the appellant's costs of the appeals, affirming the appellant's position on the jurisdictional and procedural aspects of the case.

Orders

Orders of the court

1. Each of the appeals be allowed.

2. The order of the Supreme Court of Queensland of 29 April 1980 in matter number 254 of 1977 be varied by inserting an order that the public examination of the bankrupt be deemed to have been concluded on 28 April 1980 and by deleting the condition and the provision granting liberty to apply.

3. Each of the orders of the Supreme Court of Queensland of 1 May 1980 in matters number 255 and 256 of 1977 be varied by inserting an order that the public examination of the bankrupt be deemed to have been concluded on 30 April 1980 and by deleting the condition and provision granting liberty to apply.

4. In each appeal the respondent pay to the appellant his costs of the appeal.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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