Matson, Re R.G. Ex Parte Official Receiver

[1986] FCA 69

IN THE FEDERAL COURT OF AUSTRALIA	1
GENERAL DIVISION	) QiD E780 of 1 3 7 7
BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTFICT OF THE STATE OF OUEENSLAND )

RE: ROGER GREGORY MATSON

EX PARTE: THE OFFICIAL RECEIVER IN BANKRUPTCY

DATE OF HEARING: 10 MARCH 1986

DATE J U K M E N T DELIVERED : 10 MARCH 1986

COUNSEL :

. for the applicant	Australlan Government
Mr. Dutney mstructed by t he
Sollcltor
. for the debtor	Mr. Bell instructed by
Dowllng and Dowllng

J. A. LYONS

ASSOCIATE TO PINCUS J.

10 MARCH 1986

C A T C H W O R D S

BANKRUPTCY - applicatlon for order that bankrupt not be

dlscharged - bankrupt apparently wealthy - bankrupt apparently carrylng on buslness In breach of Act - no steps taken to stop

hlm - appllcatlon granted.

Bankruptcy Act 1966, s.149, 265(1)(a), 269

Re: ROGER GREGORY MATSON

Ex P: THE OFFICIAL RECEIVER IN BANKRUPTCY

QLD E780 OF 1977

PINCUS J.

BRISBANE

10 March 1986

!

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL	DIVISION	)	QLD E780 of 1977
BANKRUPTCY DISTRICT OF THE SOUTHERN l DISTRICT OF THE STATE OF QUEENSLAND 1

RE: ROGm GREGORY MATSON

EX PARTE: THE OFFICIAL RECEIVER IN BANKRUPTCY

MINUTES OF ORDER

JUIXE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	10 MARCH 1986
WHERE MADE:	BR I S BANE
THE COURT ORDERS THAT:

1. The bankrupt not be dlscharged from bankruptcy by

virtue of s.149 of the Bankruptcv Act.

2 . The applicant's taxed costs of and lncidental to

this application be paid out	of	the bankrupt's
estate.

m:	Settlement and entry of orders is dealt with ln Order 36
of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION	)	QLD E780 of 1977
BANKRUPTCY DISTRICT OF THE SOUTHERN I DISTRICT OF THE STATE OF OUEENSLAND )

RE: ROGER GREGORY MATSON

EX PARTE: THE OFFICIAL RECEIVER IN BANKRUPTCY

PINCUS J . 10 MARCH 1986

REASONS FOR J U E M E N T

Thls 1s an application for an order that the bankrupt,

Mr. Matson, not be discharged from bankruptcy by virtue of 5.149

of the Bankruptcv Act. The application is made under s.149(12).

Although the history of the matter goes back to 21 November 1977,

when Mr. Matson became bankrupt, little has been placed before me

In admissible form as to the subsequent history of events.

It is convenlent to begin wlth an account of the facts

of recent origin, beginning with a letter written by Mr. G.J.M.

Blewett, the Officlal Recelver, on 19 August 1985. In that

letter Mr. Blewett asked the bankrupt for disclosure of hls

connection with a buslness under the name Matson Computer

Servlces at 135 Lancaster Road, Ascot, which had been publlcly

advertlsed as one whlch could produce substantial proflts for those who dealt with It, profits of the order of $1000 per week from $5000 capltal.

2 .

A reply came promptly from the bankrupt's sollcltor

saylng that the bankrupt had not operated such a buslness; that

hls wlfe Janette had done so, but had ceased to trade. The

cessation must have been fairly recent, since the advertlsement

to which I have referred appeared on 3 August 1985. On 6

September 1985, Mr. Blewett wrote again asklng for slmllar

lnformatlon and he recelved a reply dated 14 October 1985 saylng

that the bankrupt had recelved no Income whatever from any

source, that he had not worked at Matson Computer Servlces, that

the buslness "is operated by Mrs. Matson and, according to our

cllent, he is not privlty (sic) to details as to why the buslness

ceased trading." No further enqulry was made.

Two months later, the bankrupt called State pollce to

the Lancaster Road premlses and complalned that he had been the vlctim of an armed robbery, which had resulted In the removal of

~ewellery, gold and money valued at more than $50,000. He showed

the pollce ~ewels and gold bars he stlll had. They attempted to

questlon his wife about the matter but he managed to prevent her

from speaking to the police on the ground that she knew nothmg

of the matters under investigation. As will be deduced from what

has lust been sald, the inltlal story to the pollce was that the

bankrupt was the owner of the property, but later more prudent

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counsel presumably prevalled and he clalmed that It was owned by

his wlfe.

The followlng day, the pollce came to the premlses aqam

and the bankrupt showed them figurlnes whlch he sald were worth

3 .

$25,000 and a plece of furnlture whlch he said he had boughc at

auction and was worth $20,000. He told the pollce that he was

employed by hls wlfe Janette at $200 per week and that he had

kept gold on the premlses in places other than those whlch nad

been the sub~ect of the robbery the prevlous day. On 23 January

1986, the police interviewed the bankrupt again and were told

that all the property In question belonged to his wlfe. They

notlced a late model Mercedes-Benz and another vehlcle In r;he

garage. A week later offlcers from the Taxatlon Department came

to the premlses and mterviewed the bankrupt, hls wife and an

accountant, Mr. McKennarley, apparently actlng on behalf of the

bankrupt and his wife.

The general tenor of the conversation was that rhr

bankrupt and hls wlfe were operating an extremely profltable

busmess, apparently being that whlch was advertlsed. In

speaking of assets in the house, the bankrupt sald, "They are all

officially Jan's because with me being bankrupt, I can't

physically own anything. It's lust ridiculous." It appeared

that the business was a computer tlpping service from which the

bankrupt expected a milllon dollars profit would be made. He

told the officers, "All we want to do is lust sort of get down

and, you know, make a b1t of money and pay same tax."

The bankrupt pleaded gullty on 18 October 1985 to two

charges under s.265(1)(a) of the Bankruptcy Act relatlng to

concealment of assets and was placed on a good behavlour bond. However, not enough 1 s known about that matter to make It of any great Importance in the case. The questlon 1 s whether, on the

4.

facts relating to the tlpplng	busmess, it 1 s approprlate to make
the order sought.

The prlncipal contention advanced by counsel for the

appllcant was that If the period of bankruptcy were extended,

that would facilitate the recovery of any assets. It 1 s not

clear to me that thls 1 s so. It should be mentloned that the

reason for the already prolonged period of bankruptcy 1 s that an

obJection to discharge was made on 30 May 1980, and the result of

the statutory provlslons dealt with In my prevlous decision In

this matter on 2 3 January 1986 and the order I then made is that,

absent any further step, the ob~ection will lapse and the

bankruptcy cease on 31 March 1986.

Despite the then Immlnent terminatlon of the bankruptcy

and the clrcumstances disclosed last year, no effectlve step

seems to have been taken by the applicant to Investigate the

matter and it seems probable that but for the efforts of others,

such as the State police and the taxation officials, nothing more

would be known by the applicant of the bankrupt’s affairs, so far

as presently relevant, than the bald denials emanating from hls

sollcltor. I have been somewhat concerned that after such a perlod of inactlvlty, the applicant now says he needs more tlme.

I have, of course, no knowledge of whether the resources

available to the appllcant are such as to make it easy for him to

devote manpower to the task which then seemed to requlre

attention.

5.

However that may be, I am by no means convlnced that

pursult of the bankrupt for assets would be facllltated by makmq

such an order as 1 s applled for. Nevertheless, lt 1 s rlght to

make the order sought for other reasons. The bankrupt has

clalmed to be the owner of a substantlal quantity of gold and

~ewellery and is apparently conductlng a business, whlch 1 s sald

to be extremely profltable, presumably In breach of one or more

of the paragraphs of 5 .269 of the Act. As his counsel, Mr. Bell,

has polnted out, he has denled In correspondence that the

business 1 s hls. He has, indeed, denied through hls sollcltor

that he has even worked for It. However, the records of

lntervlew whlch have been placed before me make both of those

denlals ones which should be taken very cautiously and indeed, It

would be astonishing if the facts clld not turn out to be as they

appear from the lntervlews, namely that both Mr. and Mrs. Matson are in the busmess, he having the domlnant role. The questlon I

have lust mentloned would no doubt have to be further

investigated but as thlngs stand, in the absence of any evldence from the bankrupt, the prima facie concluslon must be as I have stated.

The basis upon which I consider the appllcation, then,

is that there 1 s good evidence that the bankrupt has flouted hls

obliqatlons under the Bankruptcy Act and 1s. rather surprlsmqly.

belng allowed to get away with that. No attempt has been made to secure the property to whlch I have made reference or to achleve

a cessatlon of the carrymg on of thls business. Aqaln, that may

be due, for all I know, to an lnadequacy of resources.

6.

The impresslon created by allowlng the bankrupt ta

achleve the status of	a dlscharged bankrupt on 31 March 1986
would be that the court	was unconcerned about the sort of conduct

In whlch Mr. Matson was apparently engaged. The case

demonstrates, if demonstration 1s needed, that there are those In the community who are under the impresslon that bankruptcy 1s not

a matter whlch need greatly affect those who are prepared tc

create a qulte superficial appearance that the buslness they are

engaged In is one in whlch they are not legally interested. It

seems important to do what can be done to dlspel that lmpresslon.

Counsel for the bankrupt referred me to the prlnclple

which seems to emerge from at least some authority, that one

should have regard to "acceptable standards of commerclai

morallty". In my view, the matter may be put more broadly and In

exerclslng the relevant ~urlsdictlon, the court should so act as

not to encourage the notlon that the Bankruptcy Act and those who

admlnlster It are toothless, because to d so would be harmful to

the admlnistration of the Act and tend to bring it into contempt.

I also take Into account the nature of the buslness

whlch the bankrupt is apparently carrylng on; It is one

notoriously open to fraudulent practlces.

It wlll therefore be ordered that the bankrupt not be

dlscharged from bankruptcy by virtue of 5.149 of the BankruPtcv

m, and that the appllcant's taxed costs of and Incldental to

this appllcation be paid out of the bankrupt's estate.

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