Mackay, Re O.M Ex Parte The Bankrupt

[1986] FCA 527

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C A T C H W O R D S

BANKRUPTCY - application for dlscharge - whether cogent ground need

be shown - attachment of condition to order.

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I	Bankruptcy Act, 1966 s.150
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Re: Oswald Mllne Mackay
i	Ex parte: The Bankrupt
QLD E754 of 1986
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__ IN THE FEDERAL COURT OF AUSTRALIA 1

DIVISION	GENERAL	)	QLD E754 of 1986
BANKRUPTCY DISTRICT OF THE SOUTHERN	)
DISTRICT OF THE STATE OF QUEENSLAND	1

RE: OSWALD MILNE MACKAY

M PARTE: THE BANKRUPT

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	14 NOVEMBER 1986
WHERE MADE:	BRISBANE

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THE COURT ORDERS THAT:

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The bankrupt be discharged, but the operation of

this order be suspended until 26 November 1986

subject to the condition that the bankrupt

undertake to the Court not to carry on business on

his own account or In partnership, execute any

guarantee or hold office as a director of a

company, until	26 November 1987.	I .	1
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m:	Settlement and entry of orders is dealt with in
Rule 124 of the Bankruptcy Rules. I_

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IN THE FEDERAL COURT OF AUSTRALIA	1
GENERAL DIVISION	1 QLD E754 of 1986
BANKRUPTCY DISTRICT OF THE SOUTHERN	)
DISTRICT OF THE STATE OF OUEENSLAND	)

RE: OSWALD MILNE MACKAY

EX PARTE: THE BANKRUPT

PINCUS J. l4 NOVEMBER 1986

REASONS FOR JUDGMENT

The applicant became bankrupt on his own petltion on 26

November 1984 and now applles for an order of discharge.

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The statement of affairs disclosed liabilities of

$91,095, and assets of no substantial amount. Proofs of debt for i'

amounts totalling $55,580.89 were lodged, according to the

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Official Receiver's report, and there is no prospect of a

dividend.

The report says that the bankrupt returned to Australia

from New Zealand in 1978 accompanied by his wife; they had

$300,000 in cash and invested the money in real estate at the Gold

Coast, and also by way of loan to a company, Caprino Pty. Limited.

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That company, also, bought real property, using funds given to it

by the bankrupt and his wife. In 1981, the company bought land at

the Gold Coast for sub-division, and in the same year the Gold

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Coast Clty Cotlncil i? s a 3 d to have trespassed upon the land in

question. That led to some expensive litigation whlch had an

unsatisfactory outcome so far as Caprino Pty. Limited was

concerned. The company apparently got into financial difficulties	.-.
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and property it owned in Brisbane was sold by the mortgagee, the	I
National Australia Bank. Money which had been borrowed by Caprino

Pty. Limited	was the subject of guarantees by the applicant and
his wife.

In 1983, the applicant and his wife entered into a

further venture, through a company called Bafero Pty. Limited,

borrowing money in the process. Its principal or only business

appears to have been a haberdashery shop at Tweed Heads which was

unsuccessful, and the company went into liquidation. Although,

according to the applicant, he did not guarantee Bafero Pty.

Limited's debts, he says that through	an error he was made liable
for them.

The Official Receiver's opinion is that the main causes

of bankruptcy were the failure of the two companies I have

mentioned.

There is evldence of some gambling activities. The . I -

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I	applicant told the Official Receiver	he was making substantial
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i	amounts from punting up to August 1984, and that he continued	I .	i ..
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gambling after his bankruptcy, but with smaller sums. The

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applicant told me that he wished to obtain a discharge to do work

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for "some business people from Malaysia, who are interested in me

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spending time in Malaysia on their behalf, with alternate trips

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back to Australia". He said the people in question might pay him

"somewhere around $30,000" and that he could not do the work while

he remained a bankrupt.

In Re Zion (unreported, 26 September 1986), Smithers J.

said:

"In my vlew It is the policy of the law that

l	bankruptcy should in most cases come to an end at
three years and when there 1 s an objection, at the
end of five years from the decree for sequestration
of the estate . . ."

His Honour referred to Re Maher (1985) 61 A.L.R. 592 at p.598,

that being a decision whlch I have followed on a number of

occasions. In particular, I have applied the view of Woodward J.

in that case that some "cogent ground or grounds" must be shown

for the exercise of discretion in the applicant's favour	- see
pp.601, 602.

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Here, the bankruptcy has subsisted for nearly two years.

On the evidence I find that the cause of the bankruptcy was the

failure of each of the two several business ventures mentioned

above - i.e. that by Caprino Pty. Limited and that by Bafero Pty.

Limited. None of the creditors has opposed the application. The

applicant is 60 years of age and if he is ever to re-establish

himself commercially it must be fairly soon. However, applying

the "cogent ground" test, the case is, in my opinion, a marginal

one. I think an order should be made enabling the applicant to

take employment, but subject to conditions designed to prevent him

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entering 1nt.o a business ventilre durinq the period I n which he !

would ordinarily have remained a bankrupt.

It appears from Re Mallan (1975) 25 F.L.R. 20 (special

leave refused 7 A.L.R. 259) that the power to impose a condition

given by s.l50(9)(c) may extend beyond a period of suspenslon; I- -.

it is necessary to have a suspension to enable a condition to be

attached, as I read the provision. It will therefore be ordered

that the bankrupt be discharged, but the operation of this order

1s suspended, subject to the following condltlon, until 26

November 1986. The condltion 1 s that the bankrupt undertake to

the Court not to carry on busmess on his own account or in

partnership, execute any guarantee or hold office as a director of

a company, until 26 November 1987. If the undertakmg is given,

then the bankrupt will be bound by the condition until the date on

which he would, apart from this order, have obtained his

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discharge; if the applicant is not willlng to give the

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undertaking, the application will simply be dismissed.

i certify tba+ this and tile 3 preceding

pages ar2 a :rue copy of the reasons for

judgment hcreln of His Honour

Mr. Justlce Plncus Associaq G.---

&fa /# 1986.